BY NATHANIEL SILLIN
Imagine the frustration that would follow if you spent hours planning and narrowing in on a dream home only to find out that you can’t afford it when push comes to shove. Starting with a price range can help you make the most of your search, but you’ll need to account for closing costs to create a realistic budget.
A catch-all for the fees and services that result from the sale of a home, closing costs are generally about 2 to 5 percent of the home’s value when you’re making a purchase. In other words, you could pay about $4,000 to $10,000 on a $200,000 home.
Estimating your closing costs. Your closing costs and fees vary depending on where you’re buying, how much you put down, who helps you with the home-buying process, the type of home you’re buying and the type of loan you’re taking out.
You can estimate the closing costs of homes you’re interested in by using one of the many closing cost calculators online. Also, ask your real estate agent to help you estimate the closing costs of homes in different neighborhoods.
A few of the fees you could encounter when closing on a home. While costs can vary and state laws dictate differences in the closing process, here are a few typical services or fees:
· Inspections. You likely want to hire an inspector to make sure the home doesn’t need any major repairs and there aren’t any wood-eating pest (such as termite) infestations. Many lenders require you get these inspections, but even when they don’t it’s usually a good idea.
· Attorney fees. You could have to pay attorneys to help prepare and review documents for the closing.
· Survey. Some states require you to hire a surveyor to verify the size of the lot.
· Homeowners insurance. You may need to pay several months’ worth of homeowners insurance premiums up front.
· Origination fee. Mortgage lenders, banks or brokers often charge about 1 percent of your loan’s value.
· Property taxes. Several months’ worth of property tax payments could be due at the closing.