Closing Costs When Buying – How Much More Should I Save?

When you buy a home, part of the buying process is the closing costs. These closing costs can be a significant chunk of your total amount owed. And it is important that people who are buying a home are taking their closing costs into consideration when it comes time to save for their home.

What are Closing Costs?
Closing costs are the costs that are paid at the end of the transaction when a buyer and seller have come to a decision on what is to be paid and everyone agrees. During this time, the home is transferred from the buyer to the seller. These costs are incurred by either the buyer or seller and sometimes even a combination of both.

What Fees make up the Closing Costs?
There are several fees that can make up the closing costs. These fees are not going to be seen in every transaction, it really depends upon your location, the type of property you are purchasing, and the type of loan that you may be using. Here are a few of the fees that could be included:
– An application fee
– Appraisal
– Fees for the attorney
– Closing fee or the escrow fee
– Courier fee
– Credit report
– A deposit into your escrow account
– Mortgage insurance premium
– Home inspection
– Lender’s policy title insurance
– Origination fee for the loan
– Transfer taxes
– Underwriting fee
– Recording fees
– Property taxes
– And so on…

How Much Should you be Saving?
If you are saving for a home, then knowing what closing costs could be, this can help you to save for these costs. The key is to know just how much your closing costs may be. The rule that most people follow is that the closing costs are often two to five percent of the total home cost. When you do get a loan, more than likely the payback will include your closing costs in the total amount. This loan estimate is only an estimate, and this may change as other fees may be added, increased or decreased. Therefore, don’t think that this is a concrete figure.

Once you have closed on a home, you will receive a Closing Disclosure statement that is going to state what fees are being included in the closing costs. You can then sit down and look at these for a concrete amount. This way, you are not going to be surprised by how much your closing costs are going to be.

So, how much should you be saving? If you have a certain amount that you are wanting to pay for a home, be sure to save up to five percent of this loan for the closing costs. There are times in which you can get the sellers to pay this closing cost but do not count on this. Instead, take the time to make a budget that includes an extra 5% of what you wanted to pay for a home. Not only can I help you find your next home, but I am a licensed Mortgage Broker with Invis in the province of Alberta. Let me help make your home buying experience easier, faster, and way more fun!! Sonia is your one-stop shop for all your Mortgage and Real Estate needs!

sonia-tarabay-real-estate