Categories
Make Money From Home

Buying a Home? Prepare to Pay This Much in Closing Costs – The Motley Fool

Image source: Getty Images

Hint: It’s not a small number.

…….

Image source: Getty Images

Hint: It’s not a small number.


Key points

  • Mortgage lenders commonly impose fees to finalize a loan.
  • New data reveals the average closing costs are $6,693 across all home buyers, and slightly less for first-time buyers.
  • You may be able to negotiate part of your closing costs.

If you’re gearing up to buy a home, you’re no doubt aware that you’ll need to bring a down payment to your closing. Depending on the price of your home, that sum may be substantial. But it’s not just a down payment you need to worry about when you sign a mortgage. You’ll also have to deal with closing costs.

Closing costs are the various fees mortgage lenders charge to finalize a mortgage, and they cover a lot of different things. These include:

  • Application fees
  • Title fees and insurance
  • Appraisal fees
  • Recording fees

Often, closing costs also include pre-paid property taxes. If you’re buying a home in an area with expensive property taxes, that could increase the amount of money you need to fork over when you close on your home loan.

A recent Fannie Mae report found that average closing costs amount to $6,693 across all home buyers. Among first-time buyers and low-income first-time buyers, they’re a bit lower at $6,228 and $5,298, respectively.

But all told, closing costs can be a huge expense on the road to buying a home. And it’s so important to gear up for them.

Should you pay off your closing costs over time?

It’s hard to get out of paying closing costs when taking out a mortgage. Some lenders might advertise a no-fee mortgage that doesn’t come with closing costs. But what those lenders will commonly do is bake their closing costs into a higher mortgage rate so that ultimately, they end up getting their money.

But while closing costs may be inevitable when you’re getting a mortgage, you don’t necessarily need to pay those fees on the day of your actual closing. Often, lenders will let you roll them into your mortgage and pay them off over time.

The downside there is having higher monthly payments. But if you’re taking out a large mortgage, rolling those fees into your payments …….

Source: https://www.fool.com/the-ascent/mortgages/articles/buying-a-home-prepare-to-pay-this-much-in-closing-costs/

Leave a Reply

Your email address will not be published. Required fields are marked *