Nicholas Fraser | Madeira Beach Real Estate, Seminole Real Estate, St. Petersburg Real Estate


Closing costs are usually an unavoidable part of buying a home. While there are ways to reduce some closing costs and fees, they are an expense you will likely have to consider when it comes time to save for a home.

On average, buyers can expect to pay between 2 and 5 percent of the purchase price in closing costs and fees.

In this article, we’re going to break down those costs and talk about some ways to plan for, or limit, the fees associated with closing on a home.

A breakdown of closing costs

Most closing costs in a real estate transaction are paid for by the buyer. When getting approved for a mortgage, your lender is required to provide you with an estimate of the closing costs. This is called a “Closing Disclosure statement” which overviews the details of your loan.

Different lenders will charge varying amounts in fees. Some are even willing to waive certain fees. But, we’ll discuss that later.

For now, let’s focus on the closing costs buyers typically have to pay:

  • Attorney fees - a flat-fee or hourly rate depending on the attorney

  • Origination fees - an upfront fee charged by the lender for processing your mortgage application

  • Prepaid interest or discount points - a payment for the interest that will accrue on your mortgage from the time you close until your first mortgage payment is due

  • Home inspection fee - the fee that a professional home inspector charges to inspect a home

  • Escrow deposits - Usually split with the seller, this is the fee charged by an escrow agent

  • Recording fees - fees for legally recording the new deed and mortgage

  • Underwriting fees - fees paid to the lender for researching your mortgage case and determining whether or not to approve your application

These are just some of the many fees that can be due upon closing on a home. Depending on where you live, which lender you choose, and the type of mortgage you secure, your closing costs will vary, so it’s a good idea to shop around for a lender and mortgage type with reasonable closing costs.

Reducing closing costs

Some lenders offer no-cost, or low-cost mortgages. However, these savings often come with a higher interest rate which, over the lifespan of your loan, can cost you more in the long run.

You should also be aware of the different loan types that you may be eligible for. FHA loans, USDA loans, and VA loans are all designed for buyers hoping to make lower down payments on their home.

Each loan type provides different amounts due at closing. Fortunately, your mortgage lender will be able to give you an estimate of costs for each loan type.

Want to get an estimate of the closing costs you’ll have to pay when you buy a home? You can use this online calculator to see an average.


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1673 GLADYS ST, LARGO, FL 33774  

Residential
$129,500
Price
2
Bedrooms
1
Baths
Calling All Investors!! Here's your ideal opportunity for either fix & flip, or hold and rent. This home is a solid block construction 2/1/1 with an additional shower in the 1 car garage. The home has PGT Hurricane Impact Windows throughout and an updated 150amp breaker panel. Seller currently use Florida room as extra living area with window units. Located in high and dry area just off Indian Rocks Rd and convenient for local shopping and the beaches.


Once you’re ready to buy a home, you probably have a pretty good idea of what you want. Should you buy a new construction home, or look for an existing one? Builders may refer to existing homes as “used.” This term makes them sound much less appealing. Truthfully, there are many advantages to both new and existing houses. 


Benefits Of New Homes


One of the most visible benefits of buying a new home is that it is untouched. The home is clean, and everything is sparkly new. You know that nothing in the house needs to be repaired. That is one of the most significant incentives to buy a new construction home. Having no repairs offsets some of the typical costs that homeowners incur once they buy. 


Latest Technology And Amenities


One of the other benefits of new homes is that they are not dated. You’ll have access to all of the latest technologies and amenities in a new construction home. The home will be energy efficient which will save you some money on utilities. You’ll have all of the technological comforts that you need in order to keep your devices charged and your in-home entertainment on point.


You May Be Able To Select Features


If you do buy a new construction, often, you’ll have the option to choose the details of the home. Some key features, colors, and styles will be in your control, so you can’t complain about them once you move in! 


Less Competition


There may be less competition for a new home. This is because most new homes are present in neighborhoods that are just being built. All the home on the street are most likely vacant, so people looking for new construction have a lot to choose from in one area.  


The Cons To New Construction 


Although buying new construction sounds fantastic, there are a few drawbacks. First, you’re pretty much relegated to one location- wherever the new homes are being built which is generally on a new street full of new homes. The area is essential especially when it comes to your home’s value increasing over time. Many times, new construction homes are built by the same construction company. All of the houses on the street look the same, and there may be little differentiation between them other than the color. If you’re someone who likes variety, this is something to consider.


Keep in mind that you can always buy an existing home that may be less expensive than new construction and do whatever it takes to make it your own. This is a practical option for many people. Your options may be a bit fewer if you do decide to look for new construction homes, so it’s good to go into the home buying process with an open mind as to all the possibilities that are available.         


1998 COVE DR, LARGO, FL 33774  

Residential
$275,000
Price
3
Bedrooms
2
Baths
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