The 'Deets on Closing Costs

Just yesterday we shared all the different ways you might use your tax return to help you in the purchase of a home. One of the suggestions was to use your tax return towards closing costs. But… what exactly ARE closing costs, and what all do they entail? Here’s a better explanation! 

Closing costs are all of the associated fees that you must pay to become the legal owner of a home. They are wide and varied, which can sometimes be confusing. They can range anywhere between 2% and 5% of the total purchase price of the home, which is a big variable given how widespread home prices could be. 

For Example 

Take a $400,000 home. With a variable of 2-5% of the total purchase price, you’re looking at potential closing costs ranging between $8,000 and $20,000. That can really add up! What you’re actually paying for is a litany of things:

• Appraisal fees
• Credit reporting fees
• Lender origination fees
• Title services
• Attorney fees
• Underwriting fees
• And tax service fees, among others.

Each step in the escrow process requires a different set of papers handled by a bunch of different people. And each of those people earns a paycheck. It has to come from somewhere! And that place is: your closing costs. Think of it as paying for an extremely necessary service, one that gets you in your dream home and takes care of any potential that something could go wrong. 

If you have further questions about closing costs, be sure to contact us today!