Homebuyers work hard to save up for a down payment on their dream home. Many homebuyers are unaware or uneducated about closing costs, which are required for a mortgage. No one wants a costly surprise when buying a home, so let's talk about it.
Under law, homebuyers will receive a loan estimate from their lender three days following the submission of their loan application. They will also receive a closing disclosure three days prior to the scheduling closing of their new home. You will find final details about the loan and the closing costs within the closing disclosure.
What are closing costs?
Closing costs are fees from the lender and third parties paid at the closing of a real estate transaction. Generally, these costs range from 2% to 5% of the purchase price. For example, If you buy a $400,000 home, the closing costs would likely range from $8,000 to $20,000.
The higher the price of your home, the higher the closing costs. Understanding and predicting these costs will help you prepare to buy your new home. Buying a home is such an exciting process, you will want to avoid any stress and surprises along the way.
Meet with your lender and PorchLight agent to discuss how much you can expect to pay in closing costs. The last thing anyone wants is to scramble and stress over thousands of dollars right before closing!