If you’re selling your current home to buy your dream home, it’s important to be aware of all the costs you’ll face during both transactions. On the selling side, you want to be aware of commissions and other fees. We’ve previously discussed how commission works and whether or not no-commission sales are real.
Now, we’d like to talk about what you’ll face on the buying side—closing costs.
Don’t get caught off guard by closing costs.
As a homebuyer, it’s important to plan and budget for the expenses you’ll encounter when you purchase a home. While most people understand the need to save for a down payment, a recent survey found 41% of homebuyers were surprised by their closing costs. Here’s some information to prepare you for when it’s time to close on your dream home.
What are closing costs?
One reason people might be surprised by closing costs is that they may not know what exactly closing costs are. “Closing costs” is a term used to refer to a variety of expenses above your new home’s purchase price.
In other words, your closing costs are a collection of fees and payments made to a variety of individuals and organizations who are involved with your transaction. According to Freddie Mac, closing costs can vary but typically include:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
How much will you need to budget for closing costs?
Now knowing what closing costs are, you might wonder exactly how much you should budget to cover them. According to the Freddie Mac article linked above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.
Let’s say you find a home you want to purchase for the median price of $350,300. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,000 and $17,500.
Of course, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.
So, to be fully prepared to make the move from your current home to your dream home, you need to budget for extra costs on both transactions:
- 5-6% of the selling price of your current home for real estate commission
- 2-5% of your new home’s purchase price for closing costs
Is this shocking to you? If you don’t want to lose this much money during your move, we have a solution at MarketPro Homebuyers.
No-commission sales with MarketPro:
If you’re selling one home to buy another, don’t let closing costs and commission eat up your budget. While closing costs are inescapable on the buying side, we can cut out commission and fees on the selling side so that you save money on the move to your new home.
If you’re ready to purchase your dream home now but didn’t budget for closing costs, we can help with that as well. You can sell your current home to us in a quick, uncomplicated transaction so that you’re financially set for the purchase of your new home.
Work with MarketPro:
Here’s how it works: We’ll give you a fast cash offer for your current home just as it is now. You can even choose your exact closing date to coordinate perfectly with the purchase of your new home. Our team will walk you through your quote, including a review of what your home would likely bring on the open market. You’ll get a quick, no-repairs, no-fees, no-stress, no-commission sale.
If you’re in Washington, D.C., Maryland, Virginia, or Pennsylvania, we’d love to show you how easy the sales process can be. Contact us today for a no-pressure quote.