How Much Are Closing Costs?

10/15/2020

When you buy a home, you have more expenses than the home’s down payment. These are closing costs, fees that pay for services required to purchase a place to live and to mortgage the house payments. Even if you’re paying cash for the home, you’ll still have some closing costs.

Costs vary by location because the taxes and services required differ by state and city. In Central Illinois, these costs typically range from 2% to 3% of the price of your home. On average, they are between $1,850 and $2,400 here, according to Pat Quigley, SVP, Mortgage Lender with Town and Country Banc Mortgage Services. However, closing costs are higher in other areas, up to 5% or 7% of the home price.

Who Pays Them?

While the seller pays a portion of closing costs, the buyer pays the bulk. And the buyer has to pay them before they can get keys to their new digs.

What Are the Typical Costs?

  • An appraisal of the home you’re purchasing to make sure it’s worth the price
  • A credit report to make sure you’re a good risk for a mortgage
  • A title check on the property to make sure no one else owns all or part of it
  • Recording the deed and mortgage documents with the county
  • Verification of your employment
  • A termite inspection of the property
  • An inspection of the property’s water and septic systems
  • A premium to cover the first year of home insurance
  • A fee to underwrite the mortgage

Can I Decrease Them?

Sometimes, you can negotiate with the seller to pay for more closing costs.

On the other hand, you can also increase the mortgage’s interest rate to cover them, Quigley says. “For example, a person may get a rate of 3% and pay $1,850 in closing fees or their bank may offer a 3.3% rate with no closing costs. If you plan to pay off your mortgage in a short amount of time, getting the higher rate with no closing fees may work, but if you plan on taking many years to pay it off, you will likely pay more in interest if you take the higher rate.”

Other options, according to this article on realtor.com, include taking advantage of any discounts you can get if you’re in the military or a union.

For more information on closing costs or general mortgage related questions, reach out to one of our experienced Mortgage Lenders or contact our Customer Service Solution Center at (866) 770-3100 today!

More Posts