Have you ever had a first-time homebuyer confused about closing costs? Helping clients understand these important figures is a key component of ensuring smooth sailing on closing day\u2014not to mention maintaining a high-quality client-agent relationship with the potential for extra referral business! Below you\u2019ll find some quick basics you can go over with your clients. Even experienced homebuyers may not know everything that\u2019s lumped into the category of \u201cclosing costs,\u201d and they might appreciate the extra clarification from their trusted real estate agent.<\/p>\n\n\n\n
Closing costs, also called settlement costs, encompass two types of expenses:<\/p>\n\n\n\n
One-time charges associated with a home purchase.<\/strong> Upfront collection of property taxes and homeowners’ insurance premiums.<\/strong> Estimated closing costs will be listed on the buyer\u2019s Loan Estimate Disclosure and final costs will be included on the Closing Disclosure. Total final costs can range between 3% and 8% of their home\u2019s sale price depending on the location.<\/p>\n\n\n\n
These include (but aren\u2019t limited to) loan origination fees, discount points, appraisal fees, title search fees, title insurance premiums, survey fees, transfer taxes, recording fees and credit report charges.<\/p>\n\n\n\n
This may encompass a single year of homeowners insurance premiums in addition to\u2014if the buyer is setting up escrow\u2014a few additional months of premiums. The buyer should also expect to pay multiple months\u2019 worth of property taxes, depending on their regional and lender requirements. Make sure they know they\u2019ll need to pay these items at closing!<\/p>\n\n\n\nHow much should a buyer expect to pay?<\/h2>\n\n\n\n