Common Closing Costs for Buyers
In addition to your down payment, as a home buyer you'll pay certain "closing costs". These are costs of the transaction that are typically
paid at close of escrow. A rule of thumb is to set aside 2.0% of the purchase price for such costs. This is not a hard and fast rule, however.
For example, if you have less cash on hand for a down payment or for closing costs, your Realtor® and lender can often still help you put together an offer that will work.
The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier's check. The title company or other entity conducting the closing will tell you the required amount for:
- Downpayment
- Loan origination fees
- Points, or loan discount fees, you pay to receive a lower interest rate. (Note -- we generally advise against paying points, and we don't recommend lenders who push them).
- Appraisal fee. Note that often the lender will require a check for the appraiser up front. Typically this will cost about $350.00.
- Private mortgage insurance premium (if applicable).
- Insurance escrow for homeowners insurance, if being paid as part of the mortgage
- Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
- Deed recording fees
- Title policies.
- Survey (if applicable).
- Inspection fees. Generally in our service area it's traditional for the buyer to pay for whole house inspection. The price for this depends on the size of the home. Paying this at the time the inspection is done can often save you money. The seller generally pays for the pest inspection.
- Notary fees.
- Prorations for your share of costs, such as utility bills and property taxes
A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance.
