According to a recent survey conducted by ClosingCorp, over half of all home buyers are surprised by how much closing costs are to obtain their mortgage. And many of the buyers may not even consider closing fees in their budget for a new home.
Don’t be surprised by the number on the dotted line coming closing day. After surveying 1,000 first-time and repeat home buyers, the results revealed that 17% of home buyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected. Home buyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.
Freddie Mac defines closing costs as:
Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage. These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction.
Prepare for Your Closing
If you have saved up your down payment and are ready to start your home search, one other piece of the puzzle is to make sure that you have saved enough for your closing costs. If the budget is tight, ask your agent’s friendly Title company to prepare Closing Disclosure (CD) sample, so you know what those fees will look like on the day of closing.
Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment (PMI charges are not required with down payment 20% or above). Closing costs in Northern Virginia are typically around 2% of your purchase price.
Keep in mind that if you are in the market for a home above this price range, your costs could be significantly more.
Closing costs in Northern Virginia are typically around 2% of your purchase price.
Also Read:
Here is a list of some of the fees/costs that may be included in your final Closing Disclosure when purchasing a home in Northern Virginia:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender’s origination fees
- Lender’s title insurance
- Title services (insurance, search fees)
- Deed Preparation fees
- Owner’s title insurance
- Transfer taxes (county and state taxes which are based on the sales price and loan amount)
- Survey fees
- Attorney fees
- Underwriting fees
- Land Survey fees
A few days before the Closing, the Title Company will email a five-page “Closing Disclosure” (CD). It’s important to go over this list and contact Title company with any questions and concerns before the closing day.
If you are new to the home buying process or haven’t bought a house in the last 2+ years, please note that HUD-1 has been replaced by “Closing Disclosure” or CD. To read more about this new federal regulation, please click here.
Other fees you may not have considered
More fees? Make it stop! Yes, it may seem like you have fees piling up left and right, but it’s important to consider this all part of your total home cost. These important fees are broken down into tiny bucketed lists, but they are all just part of the process. In the nature of transparency when it comes to the cost of your home, you should also consider these other expenses some homeowners are less likely to factor into their budget.
Are you planning to hire movers? Depending on the size of your home and the distance you’re moving, this could be a considerable budget item. Also, is your home move-in ready? If the kitchen is missing some critical appliances or the water heater is on its last leg, you may need to consider important repairs as part of your overall budget to make sure your home is livable. And if it’s your very first home or a large upgrade from your studio apartment, furniture is another large expense to consider.
Bottom Line
Speak with your lender and agent early and often in the process to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to. An excellent real estate agent will also help guide you through some of the other unexpected expenses come closing so you’ll be relaxed and well prepared.
If you are ready to make a move, please schedule no obligation buyer consultation.
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- The Cost of Renting vs Buying
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- What to Expect When Home Inspecting
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