Buyer closing costs are essentially the extra money that is needed order to buy a home. Closing costs are in addition to the down payment. When you are beginning to apply for a loan or making an offer on a home, this phrase will come up. There are several decisions you can make regarding how and when you pay these fees.
What is included in buyer closing costs?
Different fees and charges are included in buyer closing costs. The fees are all listed on your Buyers/Borrowers Closing Statement, although you may need the help of a professional to interpret them. There are many documents to sign and discuss. There is nothing wrong with going through them line by line with your buyer’s agent before the meeting. Here’s what to look for with regards to costs associated with new loans:
Costs of the Appraisal
Credit Report Fee
Loan Interest
Home Owner’s insurance (1 year up front)
Property Taxes (1 year up front)
Closing Fee to Title Company
Title Charges (owner and lenders policy)
Water Transfer Fees
Your exclusive buyer’s agent will be able to give you a rough estimate of the closing costs before you make an offer on the home. That way, you can budget appropriately.
Most of these fees and charges cannot be reduced. However, you can shop around for home insurance. This can make a big difference in you closing costs.
When are buyer closing costs paid?
They are paid at the closing meeting. Typically they are included as a lump sum along with your down payment, which is usually paid with a cashier’s check or by wiring the funds.
There are a couple of different ways to pay your closing costs.
You can pay your own closing costs, or you can ask the seller to pay them. You will make this decision when you make an offer on a home.
If you ask the seller to pay closing costs it generally increases the sale price of the home by the same amount. For example, you could offer $210,000 on a home and pay your own closing costs of approximately $5,000. Or, you can offer $215,000 on the same home, and ask the seller to pay your closing costs.
What are the pros and cons of each option?
A big positive is that you will not have to have the cash for these fees at your closing meeting. A negative is that you will be paying interest on your closing costs.
Buyer Pays: The up side to this option is that if you pay the closing costs yourself in “cash”, you will not pay interest on closing costs. The down side is, you will need to budget for these costs along with costs to move, any repairs that need to be made to the home before moving in, and down payment.
You may wish to discuss the pros and cons of your situation with your agent to decide the best course of action. It is wise to look for homes in a price range that also takes into consideration the closing costs.
Looking to find the best way to save onbuyer closing costs? Find the best advice on closing costs with the help of an exclusive buyers agent.