What Are Closing Costs?

Introduction

Closing costs are an essential part of the home-buying process. Understanding these fees can help you budget accurately and avoid surprises at the closing table.

Common Closing Costs

·       Appraisal Fees: Typically $500-850, covering the cost of evaluating the property's value.

·       Title Insurance: Protects against legal issues with property ownership, usually around 0.5% of the purchase price.

·       Attorney Fees: Legal assistance for closing, ranging from $500 to $1,000.

·       Loan Origination Fees: Charged by lenders for processing the loan, usually 0.0% to 3% of the loan amount.

·       Home Inspection Fees: Generally $350-650 covering the cost of inspecting the property for structural issues.

Prepaid Costs

·       Property Taxes: May need to pay a few months’ worth of property taxes upfront.

·       Homeowner's Insurance: Usually requires the first year's premium to be paid at closing.

·       Mortgage Insurance: If applicable, you might need to pay upfront mortgage insurance premiums.

Miscellaneous Fees

·       Credit Report Fee: Typically $75-150.