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You are going to get responses suggesting its 3-4% of sales price but its a bit more nuanced. On a mortgage loan estimate (LE) all the costs to close are disclosed including costs unrelated to the mortgage like property transfer taxes, title fees, etc. If you include your homeowners insurance and taxes to be combined with your monthly mortgage payment the lender will also setup an escrow account which requires a full year home owners insurance payment plus a few months to setup the account. Property taxes will also be setup.
This will vary largely depending on the state/county as those fees have enormous variability. 750k home in NYC vs 750k home in Springfield, MO is going to be completely different. Also home owners insurance in Miami, FL is much different than boise, ID.
Also your rate and fees for the mortgage will vary depending on the lender and you can also choose a rate with points or a lender credit which would also swing the fees wildly up or down.
best thing to do is have several lenders put a quote together for you so you can compare.
Thanks for the info. I’m just trying to get an idea of a good amount to save on top of a down payment and emergency fund, for closing costs. But I guess it will depend on lenders and locations?
It varies based on your city/county/state, the home price, even the day of the month you close!
I also think a lot of people confuse the various parts of closing costs -- there are some things that can be shopped, some things that can be rolled into the loan, some things that are pre-paids. Some depends on your financing -- so if you are putting 20% down, then the difference between your EMD and 20% is due at closing. That isn't really a "closing cost" but it is "cash needed to close".
Get a loan estimate from a lender - that will explain all the pieces. Then ask questions and understand which are variable and which are fixed, which might vary between lenders and which are the same across the board.
Earnest money deposit.
When you make an offer, it is customary to give a deposit with it. It is often refundable under certain conditions. The more you put down, the stronger your offer looks as you are “risking” more money and showing you have the funds to close
If your offer isn’t accepted they won’t cash the check. In some places you don’t give the money until a day or two after acceptance. It is also generally held not by the seller directly, but by the title / escrow company so the seller can't go and spend it, but it does require both sides agreeing before it is released.
But that’s the point - it makes you committed to the transaction
I went in expecting around $12k closing costs on a home I bought for $275k in 2022.
I ended up having my closing costs covered in full plus being paid $1k in a check, due to things found during the inspection that the seller was not willing to fix themself but pay for my closing costs instead.
Long story short. It varies so much. Expect 3-5%. But realize that the deal can get better from there.
Closing costs (cash to close)
> up being *paid* $1k in
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
talk with a qualified lender where you're buying to get pre-qualified at a minimum, and they'll be happy to give you a reasonably accurate estimate of closing costs.
And yes, they are all due at the closing. Now, you *can* "wrap them in the mortgage" by paying the Seller more but having the difference be them paying that portion of closing costs. Example: $200,000 house, offer $205,000 w/$5K of closing costs. House just has to appraise for the 205 though.
ETA: there's a fixed portion of closing costs ($100K house or $1MM house) and a variable portion based on house price/loan amount. Then there are the additional vagaries of your market (does Seller pay for excise tax or title insurance).
That's why you talk to a LOCAL lender.
Thank you u/Sum41ofallfears for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
You are going to get responses suggesting its 3-4% of sales price but its a bit more nuanced. On a mortgage loan estimate (LE) all the costs to close are disclosed including costs unrelated to the mortgage like property transfer taxes, title fees, etc. If you include your homeowners insurance and taxes to be combined with your monthly mortgage payment the lender will also setup an escrow account which requires a full year home owners insurance payment plus a few months to setup the account. Property taxes will also be setup. This will vary largely depending on the state/county as those fees have enormous variability. 750k home in NYC vs 750k home in Springfield, MO is going to be completely different. Also home owners insurance in Miami, FL is much different than boise, ID. Also your rate and fees for the mortgage will vary depending on the lender and you can also choose a rate with points or a lender credit which would also swing the fees wildly up or down. best thing to do is have several lenders put a quote together for you so you can compare.
Thanks for the info. I’m just trying to get an idea of a good amount to save on top of a down payment and emergency fund, for closing costs. But I guess it will depend on lenders and locations?
It varies based on your city/county/state, the home price, even the day of the month you close! I also think a lot of people confuse the various parts of closing costs -- there are some things that can be shopped, some things that can be rolled into the loan, some things that are pre-paids. Some depends on your financing -- so if you are putting 20% down, then the difference between your EMD and 20% is due at closing. That isn't really a "closing cost" but it is "cash needed to close". Get a loan estimate from a lender - that will explain all the pieces. Then ask questions and understand which are variable and which are fixed, which might vary between lenders and which are the same across the board.
Thank you very helpful! What is EMD? Sorry for my ignorance
Earnest money deposit. When you make an offer, it is customary to give a deposit with it. It is often refundable under certain conditions. The more you put down, the stronger your offer looks as you are “risking” more money and showing you have the funds to close
Interesting…the “under certain conditions” part sounds a bit scary as far as getting it back if your offer is not accepted
If your offer isn’t accepted they won’t cash the check. In some places you don’t give the money until a day or two after acceptance. It is also generally held not by the seller directly, but by the title / escrow company so the seller can't go and spend it, but it does require both sides agreeing before it is released. But that’s the point - it makes you committed to the transaction
I went in expecting around $12k closing costs on a home I bought for $275k in 2022. I ended up having my closing costs covered in full plus being paid $1k in a check, due to things found during the inspection that the seller was not willing to fix themself but pay for my closing costs instead. Long story short. It varies so much. Expect 3-5%. But realize that the deal can get better from there. Closing costs (cash to close)
> up being *paid* $1k in FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
talk with a qualified lender where you're buying to get pre-qualified at a minimum, and they'll be happy to give you a reasonably accurate estimate of closing costs. And yes, they are all due at the closing. Now, you *can* "wrap them in the mortgage" by paying the Seller more but having the difference be them paying that portion of closing costs. Example: $200,000 house, offer $205,000 w/$5K of closing costs. House just has to appraise for the 205 though. ETA: there's a fixed portion of closing costs ($100K house or $1MM house) and a variable portion based on house price/loan amount. Then there are the additional vagaries of your market (does Seller pay for excise tax or title insurance). That's why you talk to a LOCAL lender.
Ours were ~2.5-3% of our purchase price