Save for Closing Costs
Closing costs are fees and expenses you pay when you close on your house, beyond the down payment. Your specific closings costs will depend on where you live, your loan amount, and type of loan. Like your down payment, closing costs are due when you close on your loan and take control of your property. Your lender will give you a specific number, so you know exactly what to bring on closing day.
These fees pay for important steps in the home-buying process, including:
Closing or escrow fee
Property taxes and more
As a general rule, you can expect to pay 3-5% of your loan amount. This means that if you take out a mortgage loan worth $200,000, you’ll typically pay $6,000-$12,000 in closing costs. Prior to closing your loan, you’ll receive your final Closing Disclosure listing your closing costs. Once you’ve determined your closing costs, check with your closing agent about what type of payment is acceptable; generally, you’ll be asked to pay via cashier’s check.
You want to save for your closing costs and down payment as quickly as possible, so you’re prepared when the time comes to submit your offer on your first (or next) home!