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Be Prepared for Closing Costs

Sunday, January 3, 2021   /   by Elissa Tran

Be Prepared for Closing Costs

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. 

  first time home buyer, buyer

Based on information from the Wasatch Front Regional Multiple Listing Service, Inc. as of November 3, 2024. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or the MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.
The multiple listing information is provided by Wasatch Front Regional Multiple Listing Service, Inc. from a copyrighted compilation of listings. The compilation of listings and each individual listing are © 2024 Wasatch Front Regional Multiple Listing Service, Inc., All Rights Reserved. The information provided is for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Conspicuous display of the following: Information deemed reliable but not guaranteed accurate. Buyer to verify all information.
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