Saving for a down payment is a key step in the homebuying process, but it’s not the only piece you need to include in your budget. Another factor that’s important to plan for is the closing costs required to obtain a mortgage.
According to Trulia,
When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.
For those who buy a $250,000 home, for example, that amount could be between $5,000 and $12,500 in closing fees. Keep in mind, if you’re in the market for a home above this price range, your mortgage costs could be significantly greater. As mentioned before,
If this is a little overwhelming, some smart negotiating can get some of these costs covered by the seller. When you start looking, this is one of the things we’ll discuss upfront.
Trulia gives more great advice, saying,
There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney to get all the documents you need ahead of time.
The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask – your real estate agent is a great resource for getting you all the answers you need.
Reach out and let’s discuss the home buying process and be sure your plan includes budgeting for what you need to purchase your dream home without any surprises! If you’re ready to apply for a mortgage, here’s my list of recommended lenders.