Buying a home can be an exciting process. Before you sign on the dotted line, however, you want to make sure that you are aware of all of the upfront costs that are associated with buying a home in Nashville, TN. Most buyers are aware that they will need a down payment in order to purchase a home, but what about other upfront costs? Closing costs are a major part of buying a home, so if you are currently looking to buy, you want to make sure that you have budgeted enough to pay these costs in addition to your down payment.
What are Closing Costs?
Closing costs are charged by the lender and other third parties at the time the sale is finalized or “closed.” The buyer is responsible for these costs and is usually expected to pay them in full before the lender hands over the house keys.
What Charges go into Your Total Closing Costs
Many different charges go into the final closing cost amount. They vary by lender, but in most cases you can expect fees for the following items in the closing cost total:
- Credit Report Fee
- Paperwork Processing Fee
- Lawyer Fees
- Home Inspection Fees
- Home Appraisal Fee
- Land Survey Fee
- Title Insurance and Search Fees
- Pest Inspection Fee
- City/County Recording Fees
- Mortgage Insurance
- A few months’ worth of property taxes
- Loan Application Fee
How Much Will You Pay in Closing Costs?
You can expect your closing costs to be about 2-5% of the amount of the final home sale. Since the average home price in Nashville, TN is about 190,000, you can expect the final closing costs to be $3800-$9500. Lenders are required to give you an estimate of the closing costs within three days of your loan application, but the law allows for this estimate to change by up to 10% by closing day, so make sure you review the report they give you, especially for any charges that are percentage based and may change. Of course, you always have the option of walking away from the loan if you find the closing costs are too high. You may also benefit by researching different lenders to make sure you are paying the lowest possible amount in closing costs. You can also use a closing cost calculator to determine what your closing costs may be.
How Can Home Buyers Avoid Closing Costs?
The most common way that buyers avoid closing costs is by asking the seller to pay them. This is usually worked into the negotiation process. You can also choose a no-closing cost mortgage, but most likely your lender will just add these charges to your mortgage, meaning you will end up paying interest on them. You can also choose to close toward the end of the month to reduce closing costs. Lenders charge the current month’s interest up-front, on a pro-rated basis, so closing toward the end of the month means less money for you to pay up front.
Buying a Home in Nashville, TN
Now that you know what to expect, and how to avoid, closing costs you are ready begin your journey toward homeownership in Nashville, TN. Enjoy the processes, but most of all, enjoy your new home!
