Purchasing a new home is an exciting endeavor, but it can also be expensive – especially with closing costs. Closing costs include all fees and charges incurred for officially transferring a property from one owner to another. Here is all you need to know about closing costs to help you prepare!
How high will my closing costs be?
Closing costs are calculated as a percentage of the home’s purchase price. This means the more expensive your home, the higher the closing costs. Since they are typically 3-5 percent of the home’s price, if you are purchasing a $130,000 home, your closing costs can be anywhere from $1,300 to $6,500. The final amount depends on local laws and taxes, the service fees of the professionals used and various factors involving your home and property.
What kind of charges can I expect as part of my closing costs?
- Appraisal: This covers the fee of a professional appraiser who will provide your lender with an estimate of your home’s true value.
- Loan origination fee: This is paid to the lender to cover the administrative costs of the loan. This may be a fixed dollar amount or a percentage of the loan, such as one percent.
- Flood determination fee: This is paid to the lender to determine if the property is in a flood hazard area and needs flood insurance coverage.
- Interest: You will need to pay the interest covering the period from the closing date to the date of the first mortgage payment. For instance, if you close on June 12 and your first mortgage payment won’t be made until August 1, you will need to pay the interest covering June 12 to July 1.
- Document preparation fee: This is paid to the lender or title company/attorney for preparing closing documents.
- Recording and transfer fees: State and local governments often have a tax on property transfers.
Is there any way to save on closing costs?
- Schedule your closing at the end of the month. Part of your closing costs is prepaid interest charges on your mortgage for the remaining days of the calendar month. If you schedule your closing toward the end of the month, you will only pay these charges for a few days.
- Ask the seller to cover some of the costs. In a buyer’s market, and/or if your seller is particularly eager to complete the sale, you can ask them to cover some of the closing costs.
- Opt for a no-closing cost mortgage with SeaComm. We know that buying a home is one of the biggest purchases you may ever make. That’s why we offer a no closing cost option, to help you get the keys to your home without paying for the closing costs out of pocket. Click here for more details!
- Take advantage of the 2021 Homebuyer Dream Program™! SeaComm has partnered with the Federal Home Loan Bank in offering down payment and closing cost assistance of up to $9,500 to qualified homebuyers! The Homebuyer Dream Program™ is a grant that makes funds available to first-time homebuyers in New York State, earning at or below 80% of the Area Median Income.
If you don’t have enough money set aside to purchase the home of your dreams, this is the perfect opportunity for you! The next round of the Homebuyer Dream Program™ is now available. Call us at (800) 764-0566 or click here to access our online Mortgage Center!