After you’ve been approved, and before you’ve made any offers, you have to decide how much money you’re going to spend on the purchase of your home. Typically, closing costs are equal to a percentage of the purchase price.
There are a lot of fees associated with the purchase of a home including application fees, realtor fees, and fees for obtaining your credit report, these are all tied into your closing costs.
Sometimes you can get seller concessions as part of your offer. This means the seller will cover a percentage of your closing costs, or the full amount. Asking for seller concessions is a great bargaining tool. You, as the buyer, can offer to increase the purchase price in exchange for the closing costs to be paid by the seller.
How Much to Save for Closing Costs
There are a lot of overhead and processing fees tied to closing costs. You should anticipate your costs to be between 2% and 5% of your home’s purchase price.
If you’re buying a home for $350,000, closing costs can be estimated to be $7,000 and $17,500. This may seem like a large gap, so it’s best to save up to the maximum expected to ensure all costs are covered and there is no delay in closing.
Closing cost concessions are a great way to keep your saved money. Since you’ve saved enough to cover the maximum anticipated costs, if you do end up paying less, you’ll have all that extra cash on hand for upgrades, investments, or to add to your emergency fund.
Going into the home buying processing with the right information will help you make more informed decisions. If you’re searching for a home in the Kansas City area, contact A1 and we’ll help you understand closing costs and what other expenses you should anticipate during the home buying process.
What Do Closing Costs Cover?
Paying between 2% and 5% of your home’s purchase price is a lot of money. You should know exactly where all of that money is going before you write a check.
If you’re looking for clarification on mortgage costs in Kansas City, we can help you understand exactly what you’re paying for.
A basic list of fees paid from closing costs includes escrow payments for taxes and insurance, administrative fees, application fee, attorney fees, loan origination, and prepaid interest.
Your lender is required to provide a list of closing costs at least three days prior to your closing date so you know exactly how much you’re paying and how that figure was calculated.
If you’re buying a home in the Kansas City area, contact A1 Mortgage and we’ll help you find the right mortgage and lower your closing costs.