What is closing cost? Closing cost are fees associated the the closing of a real estate transaction. Your real estate transaction is considered closed when the title of the property is transferred from the seller to the buyer. Closing cost are incurred by either the buyer or seller.
Closing cost will vary based on where you live and the property you buy. As you search for a new home, it's always a good idea to factor in the closing costs so you can properly plan and manage your finances. In general, you can expect to pay 2-5% of the purchase price in closing costs, not including the down payment.
Closing costs can include the following:
- Down Payments
20% of the purchase price depending on your qualifications and loan choice - Earnest Money Deposit
The money put down when a contract is written - it usually goes into an escrow account - Lender Fees
Includes charges for loan processing, underwriting and preparation - Third-party Fees
Includes charges for insurance, title insurance, title search, appraisal fees and other inspections - Government Fees
Includes deed recording and state mortgage taxes - Escrow & Interest Fees
Include homeowner's insurance, loan interest, real estate taxes, home warranties and prepaid interest - Property Taxes
Capital tax based on the estimated value of the property
You can not avoid closing cost but there are ways to help assist the buyer with those cost.
1. Look for a loyalty program: Some banks offer customers help with their closing costs. The Emerald Coast has many lenders that The Monti Group works with on a daily basis. If you do not have a lender and need help with deciding we will be glad to connect you with the right lender.
2. Close at the end the month: One of the simplest ways to reduce closing costs is to schedule your closing at the end of the month. Depending on the real estate transaction, negotiations and the buyers and seller circumstances this may or may not be possible but it is worth discussing with your buyer's agent.
3. Get the seller to pay: Most loans allow sellers to contribute a percentage of the sale price to the buyer as a closing cost credit. Please keep in mind this is negotiable and is a great conversation to have with your lender and buyer's agent once you have decided to make an offer on a home.
4. Wrap the closing costs into the loan: You’re already borrowing the money to finance the home so this would be a great question to ask your lender if you qualify to wrap the closing cost into the loan. Lenders most likely will charge more, but if you don’t have the cash, it’s a way to get into the house with less cash upfront.
5. Are you active duty military or a veteran? There are benefits for military members to help assist in Closing Cost. Do some research and make sure you get everything you may be entitled to.
As your real estate representative our buyers agent at The Monti Group will stay in constant communication with the lender and make sure there are no surprises when it comes to the closing cost. Your lender will gladly provide you with a Good Faith Estimate (GFE) once you have found your #dreamhome.
As always we at the Monti Group would love to help you find your next #home. Call or email us today! 320-321-9902
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