What are Closing Costs?

First time buyer? Because there are a LOT of learning curves when it comes to buying your first home! A commonly asked question when buying your first house is: WHAT. ARE. CLOSING. COSTS?! Why? How? What?!? Etc.

Let’s see if we can make things clearer for you!

Simply put, there are costs associated with getting a loan on any property. Let’s start with a breakdown. Percentage-wise, expect to pay 3% of the cost of your home in closing costs. So, if your home is $100,000, expect to pay $3,000 in closing costs. 2/3rds of that (or 2% of the total cost of your home) are lender fees- so what your lender is charging to actually put the loan together- and one year of property tax and one year of homeowner’s insurance that your lender requires you to pay upfront.

The other part is your title insurance, which is typically 1% of the cost of your home. Depending on your purchase price, it may be less than that. However, we like to estimate it closer to 1%, just to be safe.

If you are purchasing a home under $330,000, which is the average market price, you are more likely to be able to get the seller to pay some or all of your closing costs on the purchase of your home.

There are other fees associated with purchasing a home, such as Realtor fees, but for closing costs, gauge about 3% of the purchase of your home price and you can fairly safely estimate how much it will cost you!

Plus, bonus! When buying a home, you don’t pay for ANY of the Realtor fees, so make sure to have one by your side to help guide you through the process! And if you’re in Utah, know that Becca Summers is a great option!

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