Calculating Closing Cost

When buying real estate, there are certain costs that you need to be aware before you sign on the dotted line. These are collectively called "closing costs" and range from a few hundred dollars to several thousand. This article will walk you through some types of closing costs and how to make sure you have calculated all of them before you show up at the bank.

Difficulty: Moderately Easy

Instructions

1. Find an average price for home inspections in your area. Most of the time sellers will pay for the home inspections, but sometimes you will have to add this fee into your closing costs.

2. Put away enough money for these typical closing costs:Credit Report - $50 Appraisal - $300 Wire and Courier Fees - $55Endorsement Fee - $75Title Closing Fee - $125 Reconveyance Fee - $75 Lender Fees (processing/underwriting) - $600Title Insurance - $300 Recording Fee - $45Title Document Prep Fee - $30 Total: $1,625

3. Factor in the cost of buying "points" as well. Most lenders sell whole points for around $1,000 per point. Also, remember that each day you are "under contract" with the bank you are being charged interest. It pays to close quickly.

4. Discuss with your real estate agent(s) who will pay the commission for the sale, you or the seller. If it is decided that part of the commission will be paid by the buyer, this is considered a closing cost as well. Typical closing costs for houses in the $50,000 to $150,000 range are around $3,000.

Tips & Warnings

• Many lenders have first-time home buyers packages that will actually roll the closing costs into the loan itself; lowering the upfront, out-of-pocket expense for strapped consumers. Check with your lender about this feature.
• Remember that closing costs are calculated seperately and "do not" include your downpayment.

Resources

• HUD Tips on Buying a Home