Closing costs are fees associated with the purchase of a home that are paid at the time of closing. These costs can vary depending on the location of the home, the type of loan, and other factors, but typically range from 2% to 5% of the home’s purchase price. Here are some common closing costs associated with a home purchase:
Loan Origination Fee: This fee covers the lender’s cost of processing the loan application and is typically 0.5% to 1% of the loan amount.
Appraisal Fee: This fee covers the cost of having a professional appraiser determine the value of the home and is typically between $300 and $500.
Home Inspection Fee: This fee covers the cost of a professional inspection of the home to identify any potential issues or problems and is typically between $300 and $500.
Title Insurance: This insurance policy protects the lender and buyer against any issues with the title of the property and is typically 0.5% to 1% of the loan amount.
Escrow Fees: These fees cover the cost of setting up an escrow account to hold funds for property taxes and insurance payments and can vary depending on the location of the home.
Recording Fees: These fees cover the cost of recording the sale of the property with the local government and can vary depending on the location of the home.
Attorney Fees: In some states, an attorney is required to handle the closing process, and their fees can vary depending on the complexity of the transaction.
It’s important for homebuyers to budget for these costs in addition to the down payment and other expenses associated with buying a home. Buyers should review the closing disclosure provided by their lender prior to closing to understand the specific closing costs associated with their transaction.
