While everyone is most familiar with saving for a down payment when buying property, closing costs are almost just as expensive! Closing costs are the thousands of dollars spent on closing the deal when you purchase assets. They will vary depending on loans, taxes, and fees, but it is equal to about 1 to 4% of your property’s value. I’ll break down some of the fees included in closing costs.
Loan Origination Fee
The loan origination fee is what lenders charge to set up a loan. This fee will cover courier fees, underwriting fees, appraisal costs, administrative fees, and more. While it will depend on the lender, it will be close to 0.5-1% of the loan amount.
Application Fee
The application fee will cover your application process for a loan, the cost of running a credit report, and additional administrative fees. Again, it will depend on the lender, but it typically ranges from $300-$500.
Mortgage Broker Fee
Closing costs are how brokers make their money. This is why it’s crucial to research brokerages when first looking for a lender. It will vary depending on the brokerage you choose but expect it to be between 0.5% and 2.75% of your property’s purchase price.
Loan Fee
If you have a loan with the Federal Housing Administration, they will charge a premium of 1.75% of the loan amount.
Property Tax
Property taxes pay for schools, road construction, fire and police departments, and local services. These are included in closing costs, and it can be as little as $500 to as high as $8,000, based on the area and the property.
Homeowner’s Insurance
Just like buying a car, sometimes lenders will require homeowner’s insurance before closing. Depending on your coverage and premium, it can range from $800 to $1,200.
Title Search Fee
A property title search will uncover all available information about a property and is commonly performed during the closing process. Typically, the title search fee will be between $75-$200 but will fluctuate depending on your property’s value and the company you work with.
Title Insurance
Title insurance will help you from a financial loss if there are issues in the title, and it can happen at any time during the buying process. It usually costs between a couple of hundred dollars to $2,000.
If you need helping with the costs of buying property this year, contact us so we can get started! Reach out to TALK Property Management– We are here to help: (512) 721-1094 or dbrown@talkpropertymanagement.com.
