Mortgage Closing Costs: How Much You’ll Pay
The process of buying a home involves many fees and costs. In fact, one of the final steps toward owning a home is paying your closing costs, which are the fees for finalizing a mortgage.
Here’s how much you can expect to pay for closing costs.
How Much Are Closing Costs?
While the total amount will be different for each homebuyer, and each loan program, closing costs will typically range anywhere from 2-6% of your loan amount. For example, if your mortgage is a $200,000 loan, you’ll pay anywhere from $4,000 to $12,000 in closing costs. This is in addition to the down payment you’ll make.
What Is Included in the Closing Costs?
Most closing costs are the responsibility of the buyer, but you can negotiate with your seller to pay some of them as a concession. The most common closing costs sellers are expected to pay include real estate commissions, property taxes, and title insurance. However, homebuyers are generally responsible for paying closing costs such as:
- Property taxes
- Appraisal fees
- Discount points
- Escrow account funds (taxes, insurance)
- Government recording fees
- Loan-origination charges
- Mortgage insurance
- Survey fees
- Credit report fees
- Title fees
How Do I Pay Closing Costs?
The most typical method of paying closing costs is to pay out-of-pocket on the settlement (or closing) date. This one-time expense will cover all of the closing costs. In some instances, such as when refinancing your loan at a later date, you can include closing costs into the new mortgage loan.
Calculating Closing Costs
Once you’ve applied for your mortgage, lenders will provide an estimate of closing costs and other fees. They’ll automatically determine the costs for you, so you can review it closely and ask questions. This also gives you the opportunity to negotiate certain fees with your seller and the lender to lower some of the closing costs. Reviewing your loan estimate and working with your lender assures you’re getting the best deal possible.
Important Note About Closing Costs
All mortgage loans have closing costs. Do not fall for misleading “no closing costs” advertising. The costs are there, but they may be hidden, usually in a higher interest rate. What good is saving $10,000 in closing costs if you have to pay an extra $25,000 in interest over the life of the loan? There are times when paying a higher rate to avoid paying some, or all, closing costs is beneficial, but make sure to discuss that situation with an experienced mortgage professional.
Close with Butler Mortgage
Closing on a home can be an exciting time, but it can also be nerve-racking. When financing your home, you’ll want a mortgage lender with expertise and experience to keep the process as uncomplicated as possible. For homebuyers in Florida or Georgia, Butler Mortgage is here to help.
For more than 25 years, our mortgage professionals have helped homeowners find their perfect loan solution. Start your mortgage process today by calling 407-931-3800, or contact us through our free online consultation form.