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Figuring how much to expect in closing costs can be confusing, especially if you’re a first time homebuyer. Here are some facts to help you factor it all in ahead of the big day.
What are they?
Let’s start with the basics. What are closing costs and why do you have to pay them?
“Closing costs are the fees and expenses that go to pay all the people around the table on closing day, for doing the work they do to ensure the property becomes yours,” says Glenn Elliot, Sales Associate at ERA Justin Realty.
What do they include?
Closing costs include: government recording costs, appraisal fees, credit report fees, lender origination fees, title services, tax service fees, survey fees, attorney fees, and underwriting fees.
How much do they cost?
“Closing costs can range from two to five percent of the purchase price of your property, with 2%-3% being average” says Jennifer Darby Metzger, Broker/Owner of ERA Justin Realty, “Generally speaking, a more expensive home will result in higher costs. Lenders are required to provide detailed estimates in advance when applying for a loan and actual amounts shortly before closing.”
How do I pay them?
Your down payment can’t be used to pay for closing costs, but the good news is they can be negotiated. “You don’t necessarily have to cough up all that cash. In some cases, the seller could agree to pay some as part of seller concessions,” says Elliot, “Your lender could also roll them into your mortgage agreement, but you’ll pay interest on it. Of course, if you have the means to pay them outright you can bring a check and pay cash at closing.”
Bottom Line
Adding in closing costs can be overwhelming when buying a house, especially if it’s your first time going through the home buying process. A knowledgeable real estate professional can guide you, and introduce you to the right lenders, lawyers, and others so that you trust all the people around the table on closing day.
If you’re looking to buy a home, Glenn Elliot or any of the experienced agents at ERA Justin Realty can help. Give us a call at (201)-939-7500 or pop into our main location at 46 Chestnut Street in Rutherford.
