You’re finally finished with the house hunt and are all ready for the house to officially be yours congrats! But before you get the title, there’s a few more payments you have to make: the closing costs.
Often times, the seller will help cover (or in some cases, completely cover) some of these fees, but it’s important to have set aside a closing cost budget beforehand in case they’re left for you to pay.
What do closing costs consist of?
Many of the costs associated with closing will be required and selected by your lender. Here are some of the most common ones:
- Credit report: A fee your lender charges for running your credit report to see if you qualify for the loan, how much they’ll lend you, and what interest rate you’ll get.
- Loan origination fee: A lender’s charge for processing the loan paperwork and administration for you.
- Appraisal: The bank will hire a licensed appraiser to estimate the market value of your home.
- Prepaid interest: You’ll be required to pay the amount of interest that becomes due as you’re settling on the home.
- Home inspection fee: Your lender may require a home inspection to take place to make sure it’s fit for settlement.
- Title services & lender’s title insurance: Title services ensure that there aren’t any pre-existing issues with your property; the price of the lender’s title insurance is based on the loan amount.
- Owner’s title insurance: The price of your title insurance is based on the purchase price of the home.
- Private mortgage insurance (PMI): If your down payment is less than 20 percent, the bank will require you to make your first PMI payment upon closing.
There are also some required services that you can shop for yourself:
- Survey fee: The fee for a surveyor to verify the specific lines of your property.
- Pest inspection: A fee you might choose to pay to have your home inspected for pests like termites (a service that isn’t typically included in a normal home inspection).
In the house hunting world, it’s hard to come up with broad numbers—with a huge variety of mortgages come a huge variety of closing costs.They tend to vary based on who you work with and what kind of loan you have, so we made this one-click calculator including the most basic elements of the process.
All you have to do in enter the purchase price of your home, and you’ll get a range that should be fairly close to what your total closing costs will look like. Remember, this range is just an estimate.
