Know Your Closing Costs

You’ve saved up your downpayment and found the perfect house to buy. But have you considered closing costs?

They’re really the first big expense you’ll have with home ownership. Which can you negotiate, and which are set in stone?

The Hidden Costs of Homebuying: What You Need to Know About Closing Costs

Buying a home is an exciting milestone, but amidst the thrill of owning your first house, it’s easy to overlook the long list of closing costs that come with it. Many people think that because these costs are often rolled into the mortgage, they don’t need to worry about them. However, understanding and negotiating these costs can save you a significant amount of money in the long run.

For a typical mortgage, closing costs usually range between 3% to 6% of the mortgage amount. Let’s break it down with an example. Suppose you borrow $250,000 at 6.5% interest on a 30-year loan. Your monthly payment would be around $1,580. If your closing costs are on the higher end—say $15,000—and you roll them into your mortgage, you’re now borrowing $265,000 instead of $250,000. This increases your monthly payment by $95, leading to an additional cost of over $34,000 over the life of the loan.

In short, closing costs matter. Being aware of them and negotiating where possible is crucial.

Negotiable Closing Costs

Some closing costs come with wiggle room, meaning you can negotiate them down. Here are a few: