When you’re in the process of purchasing a home, it’s important to remember that the down payment isn’t the only cost to consider. Closing costs are additional expenses that buyers should be aware of, and these costs can add up quickly. Here are a few important details about closing costs you need to know.
One of the first costs to consider is the earnest money deposit. This is a good faith check that is provided to the seller once the buyer goes under contract. The amount of the deposit can vary, but it is typically around 1% to 2% of the purchase price. The good news is that this money will roll back over to the buyer at the settlement table.
Another important cost to consider is the transfer tax. This is a tax that is charged by the local government for transferring the property from the seller to the buyer. The transfer tax is typically around 1% of the purchase price and is standard in most markets.
“Your lender will help you to budget appropriately and avoid any surprises at the settlement table.”
If you are getting appraisals or inspections, these are each going to come with about a $500 fee that you have to factor in. Appraisals are used to determine the value of the property, while inspections are used to assess the condition of the property.
In addition to these costs, there are also prorated costs to consider. These include property taxes and fees that will be wrapped up in your settlement sheet. These costs will vary based on the time of year that you purchase the home and can add up quickly.
To get a better idea of what your monthly payments will be and to factor in these additional costs, it’s important to connect with your lender. Your lender will be able to provide you with a closing costs sheet that outlines all of the expenses that you will need to consider. This will help you to budget appropriately and avoid any surprises at the settlement table.
If you have any questions about closing costs or would like to connect with our team, you can reach out to us by phone or email. We are always here to help and can provide you with the guidance and support that you need throughout the buying process.
