Understanding Closing Costs: What to Expect on Closing Day
by Keith Soldwisch
Closing day, the culmination of your home buying journey, is an exciting milestone. However, amidst the anticipation of getting the keys to your new home, it's crucial to understand the financial aspect of closing. One significant aspect of this is closing costs. In this video, we'll go over what’s all included in closing costs and in part 2, we will talk about what you should expect during closing day.
What Are Closing Costs?
Closing costs are the fees and expenses associated with finalizing a real estate transaction. These costs typically include various services and expenses incurred by both the buyer and the seller.
While the specifics may vary based on location and individual circumstances, common components of closing costs include:
Loan Origination Fees
Appraisal Fees
Title Search and Insurance
Home Inspection Fees
(In some cases) Attorney Fees
Recording Fees
Property Taxes and possible HOA Fees
How Much You’ll Pay
Prior to closing, you will get a breakdown of all of these fees before closing day but closing costs are typically 3-6% of your mortgage loan amount. This is separate from your down payment. Both the buyer and the seller will pay closing costs, however, the buyer pays most of them. This can be negotiated with the seller to ask them to help pay towards closing costs and put it toward seller concessions if a buyer doesn’t have enough cash on hand to purchase the home. It’s a win-win situation for both parties. The specific closing costs you’ll pay depends on the type of loan you have and the home’s value.
If you have any questions about closing costs, you can reach out to us at (515) 329-4667 and we can help answer your questions. Make sure to stay tuned for part 2 of this video where we’ll go over what to expect on closing day and how to ensure a smooth closing.
