Be Prepared for Closing Costs

Dated: December 10 2020

Views: 213

Saving for a down payment in preparation for buying a new home is pretty common knowledge. With the mortgage meltdown, most mortgages that allowed zero down payments disappeared. While FHA and VA loans still offer little to no money down, most potential homebuyers will need to save at least 5-20% of the home value.

Unfortunately, many first-time homebuyers are dismayed to learn that in addition to the large down payment, they also owe thousands of dollars in closing costs that they might not have expected. The national average for closing costs ranges from 2-4% of the purchase price, which adds considerably to the amount of savings needed to buy a home. In addition, while not a closing cost, most lenders also require a savings reserve equal to at least two months of the mortgage payment. Needless to say, it adds up.

Let’s break these costs down.

Closing costs include fees charged by the escrow or closing attorney, as well as costs associated with obtaining a home loan, including:

• Escrow fees

• Title search and filing fees

• Appraisal fees

• Home inspection fees

• Wire transfer fees

• Loan costs – These include what are termed “points”; each point is 1% of the purchase price and is used as both commission for the lending officer and as an upfront fee to reduce the loan interest rate.

These are just a few of the extra costs associate with buying and closing on a new home. It’s important to know these costs ahead of time, so potential homebuyers can save the appropriate amount of money needed to buy a home. Nobody wants to be surprised by unexpected costs and and end up missing out on the perfect property. 

Blog author image

Sweet Magnolia Homes

Sweet Magnolia Homes brings a local knowledge to the markets we serve that has been obtained from years of living and working in Atlanta and the surrounding suburbs. This means our agents are intima....

Latest Blog Posts

Stay Focused on Your Housing Goals

Buying or selling a home can be stressful, even in normal times. Right now, when the housing market is moving at a frenetic pace, both buyers and sellers are making quick decisions and are feeling

Read More

Top Trends for Your Outdoor Living Space

Summer is here and you’re spending more time outdoors. For most of us, this still means primarily in our own backyards. Personal outdoor space has never been more popular and if yours could

Read More

MAKE YOUR HOME STAND OUT THIS SUMMER

June, the official start to the summer, which means one important thing - home selling season is upon us. With the kids home from school and vacation time accumulated, both buyers and sellers are

Read More

HOW TO DECIDE IF YOU SHOULD REMODEL OR MOVE

1. Determine which is more cost-friendlyWhile both options will have costs, one will have more than the other depending on your situation. Some of the costs of selling include agent commissions,

Read More