5 Common Closing Costs when Buying a Home

Get prepared so you don’t get surprised.

Photo by Tierra Mallorca on Unsplash

With interest rates and stimulus plans relatively favorable right now, if you are looking to buy your own property then now is a great time. History has shown that great things come from hard times. Consider these startups that began during the last recession era (2008–2010):

• AirBnB
• Uber
• Slack
• Dropbox

One of those is entirely based on real estate.

So the point is, in hard times there are many opportunities, and real estate is no exception despite ebbs and flows in the market. More info on businesses during the last recession here.

It is still very important to do your due diligence regardless of when you decide to invest. So in order to more prepare you for a real estate transaction you are considering, here are 5 common closing cost fees you will probably run into. Prices are based in the Denver area as of 03/2020:

• Home inspection: $250–400
• Home appraisal: $550–750
• Lender’s title insurance: $300–500
• Closing Service fee: $150–300
• Earnest money: 1–2% of purchase price

Note that although earnest money is required for the process of closing a deal, it goes towards your down payment. So it is kind of its own category.

Now, as part of your due diligence, take this knowledge and do 2 things:

1. Research what these terms actually are and why they are necessary
2. Find out a range of what prices to expect in the area you are buying in

You will find that during a real estate transaction, many things are negotiable. You can split who pays what closing costs between the seller and buyer, and just about everything except maybe contracted services can be negotiated one way or another.

The more educated you are, the better position you can put yourself in. So do your due diligence, and enjoy your new home for years to come!