Closing Costs to Expect to Pay When Buying a Home
Today, we're talking all about closing costs and what you can expect to bring to the table when purchasing your first (or next) home!
If you are a first time home buyer, knowing all of the costs involved in buying a home is crucial to knowing your budget. I had a young couple that were purchasing their first home and was told by their lender that they have a zero down program that they qualify for. That was great news to the couple as they were on a tight budget. When they were referred to me, we had our initial meeting where I go through the process and set the expectations and go through costs. They were blown away when I mentioned closing costs. "What are closing costs?! I thought we didn't have to put any money down!". It's a bit scary that their lender didn't mention closing costs to them. Closing costs can be a complete game changer if your'e not prepared for them and know what the amount is and how to negotiate that into the sale if needed.
One of the most common mistakes that buyers make when it comes to preparing to purchase a home, is failing to budget appropriately for closing costs. In doing this, buyers are often blindsided to the reality of settlement fees, which can ultimately affect his or her ability to purchase a home.
Here's the truth: while sellers are responsible for some of the fees associated with a real estate transaction, buyers in Oregon should expect to pay between 2-4% of the total sales price in closing costs. Ona typical home priced at $350,000, a buyer should anticipate allocating roughly $10,500 toward closing costs... more on that later!
Step #1: Before you decide to purchase your first (or next) home, meet with a local real estate expert to discuss the true cost of purchasing a home. As a licensed Realtor, I'm able to provide you with resources that will help you to better understand the home buying process, your obligations as a buyer, and what you can expect to pay out of pocket, upfront.
Step #2: Work with your Realtor to understand and budget for closing costs. Buyers in the Central Oregon market are typically responsible for the following items/fees associated with the settlement of real property: one-half of the escrow fee, lender's title policy premiums, document preparation, tax pro-ration, recording charges for all documents in buyer's names, home owner's insurance premium for first year, home warranty(according to contract), all new loan charges(expect those required by lender for seller to pay), interim interest on new loan from date of funding to first payment date.
Step #3: Hope for the best, but expect the worst! Depending on the type of market we're currently experiencing, you may be able to request a concession toward some or all of your closing costs. This would be on a case-by-case basis and I will need to guide you making that determination.
If you fail to play ahead, you will be blindsided by settlement fees, which will ultimately affect your ability to purchase a home. How I can help you is strategizing by obviously first figuring out what that estimated number is for you on a the loan amount you qualify for. Then if you are able to pay that on your own, great! If not, then finding an appropriate price point that will allow us to work the closing costs in to either the loan amount or looking at other options. My goal, is to set all expectations up front so you feel the most comfortable about the process and what you'll be paying.
At this point, you may be convinced that you may need some guidance around closing costs, but you may also be thinking that you have no idea where to start.
If you're thinking about making a move, I can help you through the process. Just send me a message or text me at 541-241-6850. No pressure, just the help and guidance that you need!