How much are home buyer closing costs? Knowing how much buyer closing costs amount to is a big factor in calculating total home-purchase costs – and in factoring in just how much house buyers can afford. Closing costs represent the sum of all the fees, charges and related expenses with the closing of a new property purchase. While buyer closing costs vary depending on the total amount of the property transaction, they normally range between 2% and 5% of the total property sales price. In other words, if you purchase a home for $300,000, you can expect to pay between $6,000 and $15,000 in total closing costs. However in an all cash deal, buyer closing costs are considerably less because there are no mortgage origination fees or points paid to a lender.
What is typically included in buyer closing costs?:
- Mortgage loan origination fees. The buyer’s mortgage lender issues this expense to process the mortgage loan application.
- Points. This closing cost is charged to the buyer, by the lender, to lower the total interest rate on the mortgage loan. A one-point closing cost figure represents 1% of the total mortgage loan amount.
- Escrow fees. Buyers are charged escrow fees by the mortgage lender. In most cases, the fee covers several months’ worth of insurance and tax payments to seed the buyer’s loan escrow account.
- Home inspection fee. The home buyer also bears the burden of paying for the property’s inspection, which is paid out to a professional home inspector.
- Home appraisal fees. This is the fee issued by the home appraiser to assess the home’s value.
- Title search fees. This fee, which can be charged to either the buyer or seller depending on how the property transaction is structured, is assessed for critical paperwork involved in the home title-search process.
- Attorney fee. This closing cost fee covers the cost of legal paperwork completed by an attorney to close the home purchase process.
- Home property insurance fee. This closing cost fee is payable to the buyer to cover property insurance costs.
- Credit agency reporting fees. Credit checks are conducted to weigh the buyer’s credit health, and costs associated with those credit checks are passed on to the buyer.
Recording fees. Buyers pay recording fees to the city or county where the property purchase took place. The fee covers recording documentation on the purchase.