Don’t Get Blindsided by Real Estate HomeBuying Closing Costs
Have you ever decided to buy something, only to find out about additional costs at the end? The last thing you want is to be surprised by unexpected fees – especially at your closing.
You’ve made your financial calculations. Extra charges at the eleventh hour could make all your plans go bust.
But you can’t just skip the closing – that’s when the legal ownership is transferred.
Want to avoid being blindsided at your closing? Here’s how to plan ahead for closing fees:
What’s the deal with closing costs?
Closing costs typically run about 2% to 5% of the purchase price and are paid to lenders, attorneys and other third parties. Buyers often have more closing costs than sellers because most fees are related to the new mortgage loan.
Common closing costs for buyers:
- Loan processing fees
- Home appraisal and inspection fees
- Property taxes
Common closing costs for sellers:
- Mortgage payoff fees
- Title transfer fees
- Attorney fees for handling the closing
How can you lower the costs?
After applying for a mortgage, you’ll receive a Loan Estimate from the lender. It summarizes the loan terms, such as the loan amount, interest rate and all closing costs. Comparing Loan Estimates from different lenders is important.
Page 2 of the Loan Estimate also details the services you can shop around for, such as surveys, appraisals and title searches.
Are closing costs ever negotiable?
Yes. A seller or buyer sometimes agrees to pay part or all of the other party’s closing costs. This is something we can negotiate into the purchase agreement.
As for paying the closing costs? Some lenders will allow you to roll the cost into your mortgage. However, you’ll pay interest on it for the life of the loan. Paying cash upfront is a smarter option if you have the funds available.
Have more questions about closing on a home? Or are you ready to get your home search started? Reach out today.
HOMEBUYERS BEWARE! Book Review
This book is an excellent first step in a complicated process.
Buying a home is like buying a car, on steroids. It’s the biggest investment you are likely to make so the stakes are incredibly high. I knew that having an agent represent me was a good idea.
What I hadn’t grasped was how important it is to find one who is not connected with the selling side in any way—through an agency that also represents sellers, as most do, at least in Mass. In researching buyer agents, I found Tom through the Mass. Assoc. of Buyer Agents (MABA).
Who Pays the Home Buyer's Agent?
Both seller's agent fees and buyer agent's fees are part of a normal real estate transaction and are included in the final negotiated purchase price of the property. There should be no additional fees to the buyer for a buyer's agent above and beyond the negotiated purchase price of a home unless agreed upon between the buyer and agent before an offer is made.
In most cases, the seller's agent pays the buyer's agent for bringing the buyer, negotiating the purchase price and terms, writing a legally correct offer, coordinating inspections, responses, and financing plus handling numerous additional details on the buyer's side of the transaction.
Buyers should avoid contacting seller's agents and sellers directly unless they are comfortable negotiating and representing themselves. That is why it is important for buyers to choose their agents BEFORE they begin looking at homes or as soon as possible if they have begun looking.
To learn more about the pros and cons of various types of buyer agents, or to get a list of experienced local buyer's agents to interview without obligation. Get Started Now!
Changes in Massachusetts Real Estate Law & How they Effect the Consumer:
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