5 things you may end up paying for as part of your closing costs

Closing costs are a necessary evil when you’re buying your first home. After all the excitement of purchasing a house, closing costs can ruin the mood. They’re expensive and vary depending on where you are buying and what type of home purchase you are making. According to Assurance IQ, the average home buyer’s closing costs are $4,243 in the US. That’s a significant chunk of change, especially when you’ve already put down a large deposit for your mortgage.

Another thing to consider with closing costs is that they vary depending on where you live. Each state has different rules and regulations required for their housing market. So it’s essential to research closing costs requirements if you’re moving out of your home state. But no matter where you buy, some things are commonly part of the closing costs process. Here are five of the most common items you’ll have to pay for at closing.

• Title insurance: When buying a home, you’ll need to have the title transferred to you. This can be complicated if your future home has a long title history or disputes over title ownership. Title insurance is a protection that protects you and your lender if a conflict over title ownership arises or if tax liens are discovered against the property. In addition to title insurance, you may also have to pay fees for title transfer, a title search, a survey fee, a recording fee, or more for the title transfer process to be completed.
• Homeowners insurance: Before closing on your sale, you must have home insurance. This may require a deposit or other fees to set up.
• Home Inspection fees: Getting a home inspection is another costly part of the closing cost process, but it could save you money. A home inspector can advise you of any potential issues with the property. If something significant is found, you can use that information to either back out of the sale, negotiate a lower price, or set a condition for the owners to make repairs before the sale is final.
• Attorney fees: Depending on where you buy, you may need a real estate attorney to review your home purchase agreement and contracts. This may be a quick consultation, or it could take longer and cost more if the agreement is complicated.
• Property Tax/Fees: Your property taxes will be charged each year you own the home, but you may be required to pay an additional fee or initial tax payment when you purchase your property, depending on where you live.

Closing costs are expensive. These are just a few things you may be required to pay when you purchase a home, and there may be more you have to pay for at closing. So, it’s wise to have additional money saved as part of your home deposit to cover these costs. Sometimes, you can bundle your closing costs into your mortgage financing, but that option varies. We recommend saving up at least 1-3 % of the value of your loan in cash for closing costs. With this money tucked away and easily accessible, you should be able to complete your home purchase!