What are closing costs and how much can you expect to spend on closing costs?

What are closing costs and how much can you expect to spend on closing costs?

The first thing to know is that when buying a home there’s more to invest in the home than just the down payment, there’s also closing costs.

Closing costs are the different fees and charges that the different entities charge to handle the real estate transaction to close on the house for you, so there’s a couple main categories.

The first one is lender related fees.

Lenders may charge underwriting fees, they may charge points. You can check out some videos that I’ve done on what points are. Also, the lender orders the appraisal. Although the appraisal is a third party fee, the appraisal is the valuation of the house. There’s also third party fees. Now, depending on your state, this could encompass a lot of different things. One of the things is title company fees, so the entity that actually closes your transaction charges to handle that to collect the money, to disperse the money.

That entity handles the actual closing and also to ensure your title, that your title is clear of any liens or any other goofiness going on so that you have a clean title when you buy the house. That’s another thing the title company does. Now, depending on your state, there might be attorney fees. There might be other ancillary parties involved. For example, a survey might be required so things of that nature might be involved. There’s also typically in almost every transaction a home inspection that’s done to make sure that the house is up to specs. Now, that’s something that’s not something that the lender collects a fee for and requires, at least in Colorado, but it’s something to be aware of that you should get a home inspection.

Another thing is state, county, and city recording fees and also transfer taxes that might happen in certain areas, so that’s something to consider. Then the last category is your escrow account. This is the collection of taxes and homeowner’s insurance to establish an account so that the lender can pay those items on your behalf. Those are just a couple things about what the closing costs entail. Now, it’s hard to pinpoint a dollar amount because it’s so property specific and it’s also specific on the state that you’re in.

Generally speaking in Colorado, four to 6,000, depending on the property, is a good, super ballpark number to consider. If you want to go a little bit deeper on this and really take a look at those numbers, call me because we can look at your particular situation and figure out what the closing costs are going to look like.