Buyers: Don't Be Surprised by Closing Costs

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According to a survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.

After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected. “Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”

“Closing costs are typically between 2 and 5% of your purchase price.”

Closing costs for buyers could include: lender's charges, title company's charges, taxes and other government fees, insurance for the home and mortgge(if putting less than 20% down) and HOA/condo dues.

In Northern Virginia the charges for a $400,000 home purchase will include

Lender fees:
Origination fee $895
Appraisal fee $450
Credit Report fee $35
Flood certification fee $25
Tax Service fee $85
Total: $1490

Title fees: 
Location Survey $375 (optional)
Pest Inspection $25
Title - Closing Protection Letter $20
Title - Doc Processing/Prep Fee $20
Title - Doc Storage/Deliver Fee $20
Title - Lender's Title Insurance $1299
Title - Settlement Fee $875
Total: $2604

Total Loan Costs Lender + Title Fees: $4094

Taxes and Other Government Costs:
Recording Fees: Deed $43 Mortgage $56 Release $0
Government Recording Charges $99
Deed Tax $1333
Trust Tax $1066
Total: $2498

Prepaid Charges:
Homeowner's Insurance Premiums (12 mths) $716
Mortgage Insurance (only needed if less than 20% down payment)
Prepaid interest $137
Property Taxes for 6 months 
Total: $853

Initial Escrow Payment at Closing:
Homeowners Insurance $60/month for 2 maths $120
Mortgage Insurance (varies depending on loan amount)
Property Taxes for 2 months $673
Total: $793

Other costs:
Broker Flat Fee/Admin Fee
HOA/Condo dues (this will vary based on the dues) $100 
Title - Owners Title Insurance (charge will vary) $686
Total: $786

Total Closing Costs: $9024

Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. 

Bottom Line:
Talk to me and your lender early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.