What Closing Costs Can You Expect When You Buy A Home?

When getting ready to purchase a home, it’s important to set a budget before contacting a Calgary real estate agent. In addition to the recurring costs of owning a home (like a monthly mortgage payment, property taxes, and insurance), there are additional costs that some homeowners are not aware of - including closing costs. Closing costs are the fees you’re responsible for paying when the sellers transfer the title of the property to you, the new owners (also known as closing). For homeowners who are unaware of or unprepared to deal with closing costs, these additional fees can be a serious blow to their budget. That’s why it’s important to understand what closing costs you can expect when you close on your home - that way, you can factor it into your budget and won’t run into any expensive surprises at the finish line of the home buying process. What Closing Costs You Can Expect There’s no one-size-fits-all set of closing costs; the closing costs you pay will depend on where you live, the type of mortgage you secure, and the type of property you purchase. However, some closing costs are more common than others, including: Loan Origination Loan origination covers any administrative fees for your lender. Underwriting Fee Underwriting is another fee that goes to your lender - it covers the cost of verifying your financial background and determining your eligibility for a loan. Credit Report Your credit score is one of the largest factors in determining the interest rate for your loan. You’ll pay a fee at closing to cover the cost of pulling your credit report to verify your score. Appraisal When you purchase a home, you’ll need to pay a fee to an appraisal company to confirm the value of your home. Home Inspection As a buyer, you’ll want to have your new home inspected to confirm the property is in good condition and make sure there aren’t any major repairs needed. Pest Inspection Depending on where you live (or if you have a government-issued loan), a pest inspection may be required to ensure the property is free of termites and other pests. If so, you’ll have to pay a fee to the inspection company. Title Company Title Search The Title Company Title Search fee is a fee paid to the title company to do a thorough investigation of the property’s record to ensure no one else actually owns part of the property.Transfer Taxes: Property Tax Escrow Most lenders will ask you to put down the first 60 days worth of property taxes at closing, which they will then pay on your behalf. Private Mortgage Insurance (PMI) Premium If you have less than 20% to put towards your down payment, your lender will require you to get private mortgage insurance (PMI). You can expect your first premium payment to be due at closing. Homeowner’s Insurance Premium Homeowner’s insurance is a must when you purchase a home as it covers damages to the property. You can expect to pay part of your homeowner’s insurance premiums at closing (typically the first year). How Much Can You Expect To Pay In Closing Costs? Typically, buyers can expect to pay anywhere between 2% and 5% of the home’s purchase price in closing costs. So, if you purchased a home for $300,000, you might pay anywhere between $6,000 and $15,000 in closing costs. Before you close, your lender will give you a Closing Disclosure statement which details all of your closing costs. Ask your lender to review each item with you so you understand exactly what you’re paying for and how much you’re expected to pay. How To Lower Your Closing Costs There are two ways to potentially lower your closing costs. The first is to negotiate with your lender. Once you submit a loan application, your lender should give you a Loan Estimate within a few business days that outlines the total cost of the loan, including closing fees. If you feel the closing costs are too high, try to negotiate with your lender or shop around for another loan that offers lower closing costs.Learn more about hot markets: https://www.trulia.com/blog/5-mistakes-buyers-make-in-a-sellers-market/ The other is to negotiate with the sellers. Often times, sellers will absorb some or all of the buyers closing costs. Talk to your real estate agent and see if they can work with the sellers to take some or all of the closing costs off your plate. When it comes to closing costs, it’s important to be prepared and know what to expect. As long as you plan for them, closing costs are just another part of the home buying process. But if you don’t plan for them, they can be an expensive surprise as you finalize the purchase of your home. If you are buying or selling a home & require more assistance managing your closing costs, visit Tyler Giesbrecht Realty Group online.   Property Listings Reviews on Zillow 2936191 "We have known David Caracausa for over 2 decades. The marketing and eventual sale of our house was quick, efficient and painless. It only took about ... more "5.0/5.0 by coachjane122869426 "David is the consummate professional. We selected him as our realtor after interviewing other well regarded realtors in our market. He distinguished ... more "5.0/5.0 by meheister2435509 "David Caracausa was an outstanding personal representative for my recent home sale in North Wales, Pa. He was excellent in all areas from staging of ... more "5.0/5.0 by allan truant
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