Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 2 to 5 percent of the mortgage balance so it’s important to be financially prepared for this expense.
What are closing costs?
Closing costs include a range of charges for services related to applying for a mortgage. Some of the costs are related to the property — appraising it to verify its value and searching property records to ensure a clear title — and others are related to the paperwork involved, including attorney fees and the expense of originating and underwriting the loan.
Closing costs are separate from the down payment, and you usually need a cashier’s check (not a personal check) to pay them.
How much are closing costs?
The total tab for your closing costs depends on three key factors:
- The price of the home
- Its location
- Whether you’re buying or refinancing
As of the first half of 2021, the average closing costs for buying a single-family home were $6,837, according to real estate data firm ClosingCorp. The average closing costs for a refinance came in at $2,398.
For more information about real estate closing costs and how to buy a house, Read The SCOOP! Blog
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