Welcome to the last segment of our five part blog series, "Keystone Keys to Savings." In this final blog post we’re discussing closing costs, what they may cost you and your payment options. Understanding  closing costs can ensure you’re more prepared to unlock the door to your dream home!

What are Closing Costs? To embark on a successful homeownership journey, it's essential to comprehend what closing costs entail. Closing costs encompass various fees and charges associated with finalizing a real estate transaction, covering expenses like loan processing, title insurance, and more.

How Much Will This Cost You? Closing costs can vary, typically ranging from 2% to 5% of the home's purchase price. Understanding the potential financial commitment is key to effective budgeting during the homebuying process.

Payment Options for Closing Costs: Explore various avenues to cover closing costs, allowing for flexibility and strategic financial planning.

• Cash: The most straightforward method is paying closing costs in cash, ensuring a seamless and quick transaction.
• Builder Incentive: Some builders offer incentives to cover closing costs, providing an attractive option for homebuyers looking to minimize upfront expenses.

Example 1: No Builder Incentive with Conventional Loan

$300,000 home price, 30 year term, 5% down payment, 7.22% interest rate = $2,680 closing cost

Example 2: With $2000 Builder Incentive with Conventional Loan

$300,000 home price, 30 year term, 5% down payment, 7.22% interest rate = $680 closing cost after builder incentive?

• Lender Incentive: Similarly, lenders may offer incentives to assist with closing costs, potentially reducing the financial burden on the homebuyer.

Example 1: No Lender Incentive with Conventional Loan

$350,000 home price, 30 year term, 5% down payment, 7.22% interest rate = $3,154 closing cost

Example 2: With $5000 Lender Incentive with Conventional Loan

$350,000 home price, 30 year term, 5% down payment, 7.22% interest rate = $154 closing cost after lender incentive

• Roll closing costs into the price of the home: While not always an option, rolling closing costs into the price of the home can be a convenient strategy. However, it's crucial to discuss this with your lender and weigh the pros and cons. Note: You should weigh the pros and cons when considering rolling your closing cost into the price of your home. If the home doesn't appraise for the agreed-upon price, there may be a need to come out of pocket for the difference.

Understanding and mastering the intricacies of closing costs are vital steps in securing your dream home. By understanding closing costs, what they may cost you and your payment options, you empower yourself to make informed decisions throughout the homebuying process. Thank you for joining us in our "Keystone Keys to Savings", feel free to navigate our blog for more information regarding Financing, Construction, Design, and more! 

Note: The calculation provided above reflects current average interest rates as of 12/1/2023. It is also mportant to acknowledge that these interest rates are subject to change based on factors such as location, credit score, loan amount, down payment, loan type, and terms. As interest rates fluctuate frequently, this is not a financial quote but is intended solely as a self-help tool for personal use. It is not meant to offer investment advice.