“Closing costs” is a broad term that is used to describe a variety of fees that homeowners normally have to pay when they purchase a home or refinance in an existing home. A couple of items on the list of closing costs are paid by the seller, like the real estate agent commission if applicable, but primarily they fall to the buyer. It’s important to understand what they are and the ways that you might be able to avoid paying closing costs.
On average, closing costs will be about 2% to 5% of your total loan (on a $300,000 house that can be as much as $15,000). They vary by lender, although there are some things that you can expect from any lender, such as an appraisal fee and home inspection fee. You can find a full list of the most common fees here.
There are a few ways you can pay for closing costs:
Some lenders (like Integrity First Lending) also offer no-cost loans. These are a great option for homeowners who don’t have enough cash to pay closing costs at the time you purchase the home. A no-cost loan allows you to move forward with your home purchase right away. However, just because you don’t pay the costs in cash at closing doesn’t mean you never pay for the closing costs.
Here’s how it works:
This is a great option for homeowners who want to keep some extra cash for costs you will encounter when you move in, like landscaping, fencing, window coverings, and more. These can add up, and having more cash in your bank account to cover them can help you avoid more debt. Talk to Integrity First Lending today to learn more about this option.