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What are the Closing Costs for Home Buyers?

Image of a house made of money - closing costsWhen many people buy a home, especially first-time home buyers, they are often surprised at the amount of money they spend on closing costs. In fact, the average closing costs percentage is about 2% to 5% of the purchase price, but 3% to 6% is certainly not uncommon. So yes, those costs can certainly add up quickly.

Here are the typical closing costs buyers are responsible for. Since exact fees vary widely based on location and lender requirements, talk to your mortgage banker for specific details.

Lender Related Closing Costs

  • Credit Report
  • Private Mortgage Insurance: If your down payment is less than 20% of the purchase price, lenders require this insurance to protect their interest in the home.
  • Initial Interest: This covers the interest from the date you close until the end of the month.
  • Document Preparation Fee
  • Lender’s Title Insurance Policy: This is a title insurance policy that protects the lender’s mortgage interest in the property.
  • Wire Transfer Fees: Most lenders fund the transaction via a wire transfer versus a check.

Other Closing Costs Potentially Required by Lenders

  • Home Appraisal
  • Homeowner’s Insurance: Lenders and insurance companies require payment of the first year’s homeowner’s insurance to protect against natural and manmade disasters.
  • Flood Zone Certification

Image of a house on a calculator - closing costsTitle Related Closing Costs

  • Homeowner’s Title Insurance Policy: This protects your interest in the real estate from claims of ownership or other interests by others. While this is optional, the cost of the lender’s premium goes up without the purchase of the homeowner’s title insurance policy, so it is not cost effective to forgo it.
  • Settlement Fee: This covers the title company’s services.
  • Document Preparation Fee: Charge for the cost of preparing legal papers.
  • Government Recordation Charges
  • Proration of Property Taxes: Expect to pay the property taxes from the date you take ownership to the end of the year.

While closing costs do add up, the good news is that most of them are one-time fees. That means you’ll never have to pay them again until you buy another home. Any recurring fees, like taxes and insurance, can be escrowed into your mortgage payment. So, with a little self-discipline, you can save what you need to buy a home.

Whether you’re applying for a mortgage or wanting to sell your home, you can find many great real estate tips on our Facebook page. If you’re thinking about buying or selling a home, we can help! Contact us today!

 

 

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Welcome! We are glad you’re here. We developed this website to give you the most up-to-date Napa Valley real estate listings and the most reliable information for home buyers and sellers.

Not sure where to start? Check out our blog, vlog, and articles for information on buying and selling a home, design and staging tips, and real estate investor information.

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Welcome! We are glad you’re here. We developed this website to give you the most up-to-date Napa Valley real estate listings and the most reliable information for home buyers and sellers.

Not sure where to start? Check out our blog, vlog, and articles for information on buying and selling a home, design and staging tips, and real estate investor information.

Ready to buy? Be sure to browse our current listings.We are eager to show you your next Napa Valley home.

Relocating to the area? Read up on all the great communities that make up Napa Valley.

Is it time to sell your home? Why not have the #1 real estate team represent you?

We’re sure you have questions. And we are here to help. Contact us for information on anything real estate related.

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About Us

Leading the Pujals team are Jerry and Susan Pujals, who is ranked as the #1 Sales Team for California, Coldwell Banker Brokers of the Valley. Jerry, a Senior Broker, and Real Estate Advisor began his career in real estate with Coldwell Banker Brokers of the Valley in 1997. Susan, a seasoned Real Estate Sales Consultant joined the organization in 2008, which established the formation of The Pujals Team.

Having received national recognition for their performance and many local awards, Jerry and Susan are proud to be affiliated with Coldwell Banker Brokers of the Valley, Napa County’s real estate market leader for more than 20 years.[Read more]

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