As a prospective mortgage buyer, you likely know that you will have to make a down payment. However, in addition to a down payment, you will also have to pay various legal and administrative costs when you close on your house. These expenses are known as closing costs.
Mortgage closing costs can be significant, which necessitates budgeting for them. You should budget between 1.5% to 4% of the house purchase price to cover these expenses.
What are the Different Types of Mortgage Closing Costs?
There are various types of potential mortgage closing costs. The following is a list of the common closing cost categories.
Legal Fees
You will need to hire a residential real estate lawyer to handle your house purchase. A lawyer provides essential services like conducting a title search, drafting the title deed, and filing official documents. You can expect to pay between $500 and $1000 for legal fees, which are payable at closing to your lawyer.
Appraisal Fees
Many mortgage lenders will want an appraisal of the property you will be purchasing. An appraisal confirms the market value of the property for the lender. Appraisal fees range from $250-$350, although they are sometimes paid by the lender.
