When you’re ready to buy a home in Raleigh, it’s crucial to plan for all the associated costs, not just the down payment. A significant part of your expenses will be the closing costs. Here’s a comprehensive look at what these costs entail and how you can manage them effectively.
What Are Closing Costs?
Closing costs encompass the various fees and payments required to finalize your Triangle area home purchase. These costs can vary depending on the home’s price and your financing method, but they are a standard part of buying a home. According to Freddie Mac, typical closing costs may include:
- Application fees
- Credit report fees
- Loan origination fees
- Appraisal fees
- Home inspection fees
- Title insurance
- Homeowners insurance
- Survey fees
- Attorney fees
While some of these are one-time payments included in your closing costs, items like homeowners’ insurance represent initial installments for ongoing obligations as a homeowner.
How Much Are Closing Costs?
The same Freddie Mac article goes on to say:
Closing costs vary greatly depending on your location and the price of your home. Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.”
With that in mind, here’s how you can get an idea of what you’ll need to budget. Let’s say you find a home you want to purchase at today’s median price of $422,600. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $8,452 and $21,130.
But keep in mind, if you’re in the market for a home above or below this price range, your numbers will be higher or lower.
Tips To Reduce Your Closing Costs
There are ways to potentially reduce your closing costs:
- Negotiate with the Seller: In today’s market, some sellers might agree to cover some of these costs, particularly if their home has been on the market longer. It’s worth asking for concessions, such as having the seller pay for the home inspection or provide a credit toward closing costs.
- Shop Around for Home Insurance: With home insurance rates on the rise, it’s wise to compare policies. Solicit multiple quotes to find the best coverage at the most competitive rate, which can significantly affect your overall expenses.
- Look into Closing Cost Assistance: Many programs are available to help with closing costs, tailored to different income levels, professions, or specific locations. A good real estate professional or resources from the U.S. Department of Housing and Urban Development (HUD) can direct you to suitable programs in your area. If you want to learn more, Experian says:
Your real estate professional should be able to steer you toward applicable programs, and the U.S. Department of Housing and Urban Development (HUD) maintains a helpful resource for finding homebuying assistance programs in every state.”
Bottom Line
Preparing for closing costs is a crucial step in the home-buying process. With knowledgeable experts by your side, you can navigate these expenses without surprises. Contact Linda Craft Team Realtors for more insights and guidance on making your home purchase as smooth as possible.