Average Mortgage Closing Price Over $ 6,000 According To Research: Here’s How To Pay

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Home buyers pay an average of $ 6,000 in closing costs, according to a new report. Here are three ways to cover the costs of buying a home in today’s real estate market. (iStock)

Buying a home is a financial decision that should not be taken lightly. Aside from the cost of buying new furniture and hiring a shipping company, you should consider the initial cost of getting your mortgage. These closing costs may include, for example, appraisal fees, application fees, attorney fees, mortgage broker fees, loan disbursement fees, and home inspection fees.

The average cost of closing a single-family home in 2020 exceeded $ 6,087 including taxes or $ 3,470 excluding taxes. according to new research by ClosingCorp… They represent an increase over the same period last year by 5.9% and 3.9%, respectively. But in reality, this is not so bad, considering that the value of houses during this time has increased by 8.4%. according to Zillow

Estimated closure costs are higher in states with high cost of living and house prices. For example, closing costs and taxes on a home in our capital city cost nearly $ 30,000, but the average selling price of a home during that time was $ 710,669.

The ClosingCorp report also disaggregated closure costs by metro area and county. Closing costs reached a staggering $ 67,000 in New York County, which includes Manhattan – where the median home sales price was $ 1.34 million.

Fortunately, the typical homeowner doesn’t have to pay tens of thousands of dollars to cover expenses, but even a few thousand dollars can be difficult to scrape together when you’re already save for a down payment and other travel expenses. Read on to find out how you can pay the final mortgage costs.

When you are looking to buy a new home, it is important to compare mortgage rates to make sure you are getting a great deal. You can pre-qualify for a mortgage in the online Credible loan marketplace to see potential interest rates from multiple mortgage lenders without affecting your credit rating.

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3 ways to pay for closing costs

It is recommended to pay for the closing in cash, but this has several disadvantages. The cost of closing a mortgage can eat up your savings at a time when you have little money to spare. You don’t want to spend all your savings on closing expenses only to risk running out of your emergency fund in the event of unexpected expenses.

And even after I dedicated every extra penny and tax refund check to your savings account, you may not have enough money when it comes time to buy a house. Fortunately, there are several ways to pay for closing costs without losing your savings:

  1. Include closing costs in your mortgage
  2. Request Seller Assignment
  3. Loan from a pension fund

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1. Include closing costs in your mortgage

Depending on the type of mortgage, you can include most of your costs and closing fees in your loan balance. For example, FHA loans allow first-time home buyers include closing costs in the loan amount.

If you are refinancing your existing mortgage, you can usually include your closing costs in a new home loan. Just make sure the closing costs are not too high to offset the lower interest rates.

Whether you are looking to buy a new home or refinance an existing mortgage, find the lowest mortgage rate for your financial situation on Credible. You can compare rates for several lenders without affecting your credit rating.

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2. Request an assignment from the seller.

Another common way cover closing costs – ask the seller for concessions during the negotiation process. Here’s how it works: Instead of offering a lower price for the home you want, you can offer the full asking price and require the seller to take over 5% of the closing costs.

The amount of concessions you can ask for depends on the type of mortgage loan. Here are the seller’s maximum concessions on conventional home loans:

  • FHA loans: 6%
  • USDA loans: 6%
  • VA Credits: 4%
  • Regular loans: 3-9%

In today’s hot real estate market, it can be difficult to negotiate the costs of closing a deal with a seller. Asking for concessions can make your offer less attractive, and a seller who has received multiple bids on their property is likely to ignore any offers that include concessions.

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3. Borrow from a pension fund.

Some 401 (k) providers allow you to borrow against your retirement account or make an early withdrawal to pay for the costs of buying a home, including the cost of closing a mortgage.

Getting a 401 (k) loan is usually the best choice because you won’t have to pay taxes or early withdrawal penalties if the loan is paid on time. You can borrow up to 50% of the guaranteed balance or up to $ 50,000, whichever is less. In addition, because you borrow money from yourself, you will be paying back interest and you will not have to go through a credit check like with other forms of financing.

On the other hand, when you withdraw 401 (k), you will have to pay income tax on the amount, as well as a 10% early withdrawal penalty if you are under 59 and ½. The only limitation is that the withdrawal cannot exceed the amount required to purchase your home.

The best option to pay or cut closure costs will depend on your unique financial situation. To find out more about the costs of buying a home and getting a mortgage, contact a loan officer in Credible, which can help you with the process.

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Have a financial question but don’t know who to contact? Write to a safe money expert moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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