What are closing costs and what should you know about them?  Simply put, closing costs are fees that have to be paid at closing.  Here are 5 things to you should know about buyer closing costs.  

1. What are the typical fees that are incurred during buying a home?  Title Company fees (closing fee, service fee, title insurance), Lender fees (if getting a loan- includes their closing fee, appraisal fee, application fee, underwriting fee..), Prorated HOA fees (these are typically paid in advance for the year so a portion would be returned to the seller), survey charge if purchased.  Real estate transactions are never the same, so these can vary from transaction to transaction. 
2. How much should I expect to pay in closing costs as a buyer?  The general rule of thumb is to expect closing costs to be around 2-5% of the purchase price.
3. Are buyer closing costs the same as seller closing costs?  No, they are different.  Typical buyer closing costs are mentioned in #1 above.  For a seller, typical closing costs will be between 5-10%.  The biggest part of seller closing costs is the commission to the real estate agents (the one representing you and buyer’s agent if all agreed upon).  There also are title fees and prorated taxes for the portion of time you lived in the property for that calendar year.
4. Do closing costs include my down payment?  The typical closing costs for buyers described above (2-5% of purchase price) does not take into consideration the down payment.  That is considered a separate expense when buying a home.
5. Can I negotiate closing costs?  Negotiation to reduce closing costs after the costs have already been incurred are highly unlikely.  However, you can definitely do your research and shop around for a lender or title company with lower fees.  It is less common in our current market but, as a buyer, sometimes you can have the seller help pay some of your closing costs.  This is more likely to happen in a buyers market.

If you have a specific question that wasn’t answered above, feel free to contact me.