Savvy home buyers who are preparing to make a real estate purchase may have done their research and may understand that they need to save money for both the down payment and the closing costs. The closing costs can account for as much as three to five percent of the sales price in some cases, so this can be a rather sizable amount of money. Some home buyers, however, may not realize that the amount of closing costs paid may vary considerably based on the home that is purchased. With a closer look at why this is, home buyers can make a more educated decision when selecting a home to purchase.
Prepaid Taxes And Insurance
One of the most significant closing costs relates to prepaid taxes and insurance, and both of these expenses are directly tied to the location and value of the property. Consider that the property tax rate can vary from neighborhood to neighborhood or county to county, and real estate insurance can vary based on the type of construction the home is or if the home is located in a flood plain. These are only a few examples of how the location and property type can impact these fees, and home buyers may consider paying close attention to tax rates and insurance costs when selecting a property to purchase.
Third Party Reports
There are several third party reports that are commonly paid for at closing, and these include an appraisal, a survey, a pest inspection and a property inspection. The third party reports may vary in cost based on the size of the home, the amount of land that is being purchased and even the condition of the property. Those who want to keep their closing costs lower may consider learning more about how these fees are calculated up-front before finalizing their plans to buy a specific home.
Title Insurance Fees
Title insurance fees are another typically sizable expense for home buyers, and this insurance offers protection to the lender if the title is not clean. Title insurance can increase based on the size of the property as well as different factors that are revealed with a title search. This information can be difficult to learn with an initial home search, but home buyers should be aware that title defects can increase closing costs.
The location, size, age and construction of a property all can impact closing costs. Those who are shopping for real estate may be inclined to make a decision that keeps closing costs down, and you can reach out to any of our team at Team Teller for more assistance with questions related to closing costs.