Are you Trying to sell house fast? Closing costs are a necessary evil in the home buying process. If you don’t plan for them in advance they can put a damper on your excitement and eat into your expected profit.
But with proper planning, closing costs don’t have to be scary at all.
The trick is to go in with an accurate estimate for how much you expect to pay in closing costs and deduct that from your overall profit from the beginning.
Understand Closing Costs on Houses for Sale in Your Area
Closing costs are sometimes presented as a lump sum but they represent many different fees payable to everyone involved in the home buying process. These may include:
- Title insurance
- Home inspection
- Appraisal fees
- Credit report fees
- Loan payoff fees
- Transfer taxes
- Mortgage prepayment penalty
- Recording fees
- Attorney fees
- State-specific fees and taxes
With so many different fees being paid to so many different players, it’s easy to understand why fees vary as much as they do.
Closing costs will depend not only on location but also on your lender, title company, home inspector, appraiser, etc.
Most of those fees are relatively small and easy to estimate. But taxes can add up pretty quickly depending on where you are and how much your house cost.
Do the Math Based on Your Expected Sale Price
Most fees included in closing costs are calculated based on a percentage of the sale price, so they’ll vary greatly from house to house.
Don’t try to estimate your own closing costs based on what your friend tells you they paid, unless you know how their home price compares to yours. Fees can vary by location too, so it’s always safest to sit down and run the numbers yourself.