What Are My Closing Costs As a Buyer

written by Jennifer Chiongbian
MORTGAGE EXPERT
12 · 20 · 20
Closing Costs

Closing Costs are expenses associated with paying the people involved who helped facilitate the transaction for the purchase of your new home.

Sellers also have to pay their own share of closing costs, and the largest one is often the broker fee. Buyer’s typically do not pay the real estate broker they used to help find them the property. The seller’s broker splits the fee with the buyer’s broker.

A large chunk of your closing cost will typically be your 20% down payment and the loan origination fees. These costs are costs associated with the property’s purchase but outside of the property’s cost.

Loan origination fees are expressed as “points.” A buyer can purchase these “points” to bring down the interest on the loan.

In a buyer’s market, some sellers will be willing to negotiate some of the buyer closing costs or offer incentives to quickly sell their property.

It is safe to assume a 3%-5% closing cost based on the home’s purchase price. 

$300,000 home x .05 = $15,000 total highest closing cost.

It is wise to prepare for the highest amount possible. It is better to have extra cash on hand than be short. Keep in mind that your closing cost is in addition to your down payment.

Other Fees

Other fees associated with closing costs aside from the large ones discussed above are: 

  • mortgage application fees 
  • title fees such as title insurance and a title search fee
  • transfer taxes
  • appraisal fees 
  • recording fees 
  • courier fees 
  • credit-reporting fees
  • prorated property taxes 
  • flood insurance (if applicable) 
  • homeowner’s insurance
  • private mortgage insurance (if applicable)

This is by no means a complete list, but it gives you a solid perspective on what closing costs to expect.

All these closing fees are required by law to be presented to the buyer within 3 days before the set closing date. It is called a Good Faith Estimate of (GFE). You will see all the fees and charges listed, as well as your total estimated closing amount to bring to the table.

Day of Closing

You will be required to bring a certified bank check at closing, but in the era of COVID-19, a wire transfer will be accepted. Find out the details of closing from your title company or closing attorney. 

Especially with COVID-19 restrictions in place, the real estate closing landscape has had to adapt just like the rest of us in the way we do business and work.

Final Thoughts

There are a couple of items that will be up to you to arrange and pay for out of pocket outside of the title company or real estate attorney closing costs that you may want to consider. 

These are not large ticket expenditures but can be worth their weight in gold. One is a pest inspection. Some states or government-backed loans will require this. It costs about $100.

The other is a home inspection. NOT to be confused with an appraisal inspection. A home inspector checks for compliance issues and structural hazards or defects. This includes electrical and plumbing. He works for YOU. He or she is also an integral part of your real estate dream team.

You can ask your real estate broker for a referral.

Author

Jennifer Chiongbian

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