With mortgage interest rates going down, many home buyer hopefuls will be entering the housing market to see if they can find a house that meets their needs and their budget. If this sounds like you, you may have a list of questions about down payments, real estate agents and so much more. We have lots of blogs to help answer all your home buying questions, and this month we’ll be covering one of the costliest expenses of the home buying process: closing costs.
What are closing costs?
Closing costs are the fees and expenses you will bring with you to the “closing table”—aka the table you sit at with your real estate agent to sign everything on the dotted line. The closing costs you’ll need to pay will depend on the type of loan you take out and where you live. They include things like appraisal fees, attorney fees, and title insurance.
How much are closing costs?
Closing costs depend on the price of the home you are purchasing, where the home is located and whether you’re buying or refinancing. Typically, they will be around 2–5% of the home price, so if you are purchasing a home for $200,000 closing costs could be anywhere from $4,000–$10,000.
Who pays closing costs?
Both the buyer and the seller will pay some portion of the closing costs. It’s common for the buyers’ and sellers’ agents to negotiate who pays for what. Your real estate agent will be able to tell you exactly how much you will have to pay once negotiations have been finalized, so there won’t be any surprises once you get to the closing table.
Don’t let closing cost numbers scare you away from buying a home of your own. Many home buyer programs, including our NC 1st Home Advantage Down Payment, will let you use some of the down payment assistance money towards your closing costs. Talk to a lender today to see how you can make buying a home affordable before the year ends!
