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January
24

Buying your first home is exciting, but don't be surprised when it comes time to pay for closing costs. Here's all you need to know.

Congratulations on finding your dream house among Beavercreek homes for sale. We're glad you got a loan, and everything is working out so you can buy your home. No doubt your real estate agent has talked to you about all the costs attendant to the loan you're getting for the house, including the down payment and now closing costs. Perhaps you have a general idea about what closing costs are. But how about going into these costs a little deeper so you'll know what to expect.

Here's what our REALTORS® have to say about closing costs.

What Are Closing Costs?

Simply defined, closing costs are the fees you pay to your lender to process your loan. They cover the home appraisal, as well as searches on your home's title. Closing costs will vary depending on your loan type and what is generally charged for closing costs in Ohio. Let's say you're looking to buy a house that costs from $100,000 to $200,000. Total closing costs could run from $1,659.73 to $6,638.90. Typically closing costs account for 3 to 6 percent of the loan amount. You can easily find a closing cost calculator online

Closing costs, which don't include the down payment, can be negotiated. The seller might pay part of or all the closing costs. Negotiating power usually depends on the type of market that prevails.

If at all possible, pay the closing costs as a one-time expense.Yes, you can fold them into the loan and pay them out with your mortgage, but then you're paying interest on the closing costs.

What You'll Need to Determine Closing Costs
Whether you use a calculator or get your lender or real estate agent to help you figure out your closing costs, you'll need the following figures:

  • Price of home — The total you plan to spend on the home before the down payment or closing costs. 
  • Down payment — Remember that a larger down payment will lower your monthly mortgage payment, but you want to save money for closing costs and emergency expenses. 
  • Amount of loan you're seeking
  • Estimated interest rate
  • Projected date of closing
  • Property tax (annually)
  • Homeowner insurance (annually)

Who Pays Closing Costs?

Typically the buyer pays closing costs, but sellers sometimes pay some of the closing costs in an agreement called a seller concession. Usually, this occurs when there are more homes in the market than buyers or also if the property is challenging to sell for whatever reason.

If you're going to have trouble coming up with the closing costs, you may seek seller concession, but be aware that sellers can offer only a limited amount for closing costs. The seller can offer up to a certain percentage of the mortgage value, and that will vary by loan type. Ask your real estate agent to recommend a negotiating strategy. Also, ask your agent about a breakdown of how much a seller can offer for closing costs depending on the loan type and other factors.

How Much in Closing Costs?

Buyers pay different amounts in closing costs. There are government requirements, lender requirements, and optional requirements. Your payment will depend on Ohio's requirements, your lender's requirements, and the type of loan you take out. Your lender will provide a "Closing Disclosure" that lists the closing costs you need to cover and how much.

Questions? We can answer your questions about closing costs and more. Contact Wright-Patt Realty.