11 Sep All About Closing Costs – What They Are & How Much They Cost
When you go to sell or buy a home in Maryland, there are many things to know. This is sure to be one of the biggest financial transactions of your life, so understanding the process from top to bottom is important. In this article, we are going to discuss one of the pieces of the financial puzzle that has to come together in order to buy or sell a home – closing costs.
What Are Closing Costs?
As the name would indicate, closing costs are fees that come along with closing out your home transaction. No matter which side of the transaction you are on, it may be that you are required to pay these fees in order to finish up the deal. Since there is so much money at stake here, you don’t want to be caught off guard by the closing costs when you are just about ready to sign papers and make things official. Be clear on the situation with closing costs early in the process so you can plan accordingly.
Let’s attach some specific names to the general category of ‘closing costs’. What kinds of costs can be included here? For starters, an appraisal may be included in your closing costs, which is the fee required to hire someone to evaluate the market value of the home. Along the same lines, the cost of a home inspection may be considered a closing cost. Among other items are homeowners’ insurance, application fee, credit report, closing fee, property tax, and more. You’ll need to find out which of these closing costs are going to apply in your case, in order to get a better idea of what the grand total will look like.
How Much Will It Cost?
There is no way to know exactly how much your closing costs will be without first knowing the specific details of your situation. With that said, it is common for closing costs to come in somewhere between 2% – 5% of the cost of the house. On $200,000, that would add up to $2,000 – $5,000. Obviously, that is a rather large range, but there are too many variables involved here to get much more specific.
Think Twice About Avoiding Fees
You may encounter an opportunity to work with a given lender in order to close a loan with no closing costs attached. This is going to sound like a great deal – but you may want to stop and think it over first. If the lender is willing to close your loan with no fees attached, they are most likely going to want to earn that money back in another way. Namely, you may wind up with a higher interest rate, which is likely to cost you more money in the long run. Rather than trying to find a deal with no closing fees, consider negotiating the fees as part of the bargaining process. As a buyer, for example, you may be able to convince the seller to pay the closing costs.