When you’re buying a house, there are a lot of different fees and expenses that go into the final purchase price. But don’t worry – our handy guide will help you calculate all the closing costs so there are no surprises!
What are closing costs?
Closing costs are fees associated with purchasing a home. They can include things like loan origination fees, title insurance, appraisal fees, and other miscellaneous expenses.
Closing costs can vary widely depending on the price of the home, the location, and the type of loan you get. It’s important to calculate your closing costs carefully so that you know how much money you’ll need to bring to the table when you close on your new home.
How to calculate your own closing costs
When you’re buying a house, it’s important to know what your closing costs will be. Closing costs are fees charged by the lender and other parties in the transaction, and they can add up quickly.
Fortunately, there’s a way to calculate your own closing costs so you can be prepared for them. Here’s how to do it:
1. Get an estimate of the loan amount you’ll need. This can be done by getting pre-approved for a mortgage or by using an online calculator.
2. Add up the estimated costs for items like the loan origination fee, appraisal fee, title insurance, and so on. These will vary depending on the lender and the type of loan you’re getting.
3. Multiply the total estimated cost by the loan amount to get your closing costs estimate. For example, if your estimated cost is $4,000 and your loan amount is $200,000, your estimated closing costs would be $8,000.
Keep in mind that this is just an estimate – your actual closing costs may be higher or lower depending on a number of factors. But knowing ahead of time what to expect will help you budget for this important expense.
What fees are included in closing costs?
When you’re buying a house, there are a lot of fees and costs to think about. Closing costs are one of the biggest expenses, and they can be confusing because there are so many different fees included. Here’s a guide to help you understand what fees are included in closing costs, so you can budget accordingly.
The first thing to know is that closing costs are typically split between the buyer and the seller. In most cases, the buyer is responsible for paying their own closing costs, as well as the seller’s agent’s commission. The seller usually pays for their own real estate attorney, title insurance, and any transfer taxes.
So what fees are included in closing costs? There are four main categories: loan origination fees, third-party fees, escrow and title fees, and miscellaneous fees.
Loan origination fees are charged by the lender for processing your loan application. These fees can vary depending on the lender, but they’re typically around 1% of the loan amount. So on a $200,000 loan, you could expect to pay $2,000 in loan origination fees.
Third-party fees include charges for services like appraisals, home inspections, and credit reports. These fees can vary depending on the services you need, but they’re typically around $500-$1,000.
Escrow and title fees are charged for services like title insurance and escrow services. These fees can vary depending on the state you’re buying in, but they’re typically around $1,500.
Miscellaneous fees include charges for things like recording fees and home warranty plans. These fees can vary depending on the state you’re buying in and the services you choose, but they’re typically around $200-$300.
In total, closing costs can range from 2% to 5% of the purchase price of your home. So on a $200,000 home, you could expect to pay $4,000-$10,000 in closing costs. When you’re budgeting for your new home, be sure to factor in closing costs so you don’t get any surprises at the end.
How to negotiate closing costs with your lender
If you’re buying a home, one of the things you’ll have to negotiate is who pays the closing costs. These are the costs associated with finalizing the purchase of the home, and they can range from a few hundred dollars to several thousand.
The good news is that you can often negotiate who pays these costs with your lender. If you’re able to get the seller to pay them, that’s even better. Here are a few tips for negotiating closing costs:
1. Know what they are and what they typically cost. Closing costs can include things like origination fees, appraisal fees, title insurance, and more. Knowing what these costs are ahead of time will help you negotiate them more effectively.
2. Get quotes from multiple lenders. Not all lenders charge the same amount in closing costs. By getting quotes from multiple lenders, you’ll be able to see who’s willing to be more flexible on these costs.
3. Be willing to walk away. If your lender isn’t willing to budge on the closing costs, don’t be afraid to walk away and find another lender who’s more willing to work with you.
4. Ask for credit towards future repairs or upgrades.
5. Be prepared to pay some of the costs yourself. If you’re really set on the home, you may be willing to pay some of the closing costs yourself in order to get the deal done.
When you’re buying a house, it’s important to be aware of all the costs involved — not just the purchase price. Closing costs can vary widely from one lender to the next, so it pays to shop around and compare rates. Our closing cost guide will help you calculate these costs so that you can make an informed decision about your home purchase.