Figuring Out Closing Costs

Of course things can never be as easy as just, “go buy a house!” There are always, always, always those extra steps and unforeseen expenses. One of the most forgotten parts of the whole process is factoring in closing costs. Who pays them? And how much? We break it down for you.

Closing costs cover a wide variety of fees and taxes ranging from 2-7% of the home’s purchase price. That may not seem like a big difference but when you’re dealing in the six figures, it can add up. For example, on a $250,000 house, that means closing costs could range from $5,000 to $17,500.

It’s not all black and white. There are portions of closing costs that you can whittle down.

Wiggle Room

While there’s not really anything you can cross off the list completely, there are certain costs you can try to shrink.

Home inspection: oftentimes, sellers with offer to cover the cost of an inspection as an incentive for the buyer. It could save you around $500!

Lender fees: make sure the fee for their services are itemized so you don’t end up paying for your own credit check, application processing, or even just applying in the first place. “Junk Fees,” they’re called.

Home insurance: this is required but there’s nothing wrong with shopping for the best deal!

Title insurance: this is also a requirement, and also something you can shop for. Don’t just go with the first name that pops up on your Google search.

Seller’s costs: want a simple way to cut closing costs in half? Ask the seller to pay theirs… or even yours. The answer is always no if you never ask.

Closing date: request a closing date on one of the last days of the month. Interest starts accruing on the day you close and doesn’t end until the loan is paid off. During the first month you will have to pay the accrued interest from your closing date until the end of that month, which will obviously be less if you’re paying 1 day’s worth of interest versus 28.

You’re almost there! All that’s left is the final walk through and you’ll have the home of your dreams.

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