Closing Costs Calculator
When it comes to your money, it’s never a good feeling to be caught off guard. No one likes to be surprised by a high utilities bill, or hit with an unexpected late fee. Far better to know what’s coming in advance so that you can plan for it and mentally prepare yourself for the first time you look at your depleted bank account. This is certainly true of buying a home. Before taking on a mortgage and buying a house, most people want to know everything they can about how purchasing a home will impact their finances.
There’s one number in the home-buying process that is especially hard to pin down: Closing costs. The best guess most financial advisors and websites will give you is that closing costs are typically between 2% and 5% of the home value. True enough, but even on a $150,000 house, that means closing costs could be anywhere between $3,000 and $7,500 – that’s a huge range! While your lender is required to provide a loan estimate explaining your closing costs within three days of your submitting a loan application, that often occurs when you have already selected a home and are trying to finalize a deal. Not a great time to learn about thousands of dollars in fees you didn’t see coming.
Part of the reason closing costs (also called settlement costs) are so difficult to determine ahead of time is that they aren’t one line item, but rather a collection of different expenses that arise for different reasons. Some depend on the state in which you’re buying your home, others on the county. Some are related to your lender and the type of mortgage you’re getting, and some have to do with the real estate professionals who are helping you get your deal done. In all, closing costs are a messy amalgam of variable fees.
A closing costs calculator like ours lets you see closing costs based on the specifics of your financial situation. Below, we’ll take you through each one line by line, so you can understand what you’ll be paying for.
The government has come up with rules that lenders must follow when it comes time to reveal estimated closing costs to people who are shopping for a mortgage. The government-mandated closing costs form is called a loan estimate (formerly known as a good faith estimate).
When you look at a loan estimate, you’ll see a break-down of closing costs. Some of these will be listed as loan costs. This means that they’re directly related to the cost of providing you with a home loan. Of these costs, some carry a fixed price and some are services you can shop for if you want to try to get a better deal.
A financial advisor can help you create a financial plan for your home buying goals. To find a financial advisor who serves your area, try our free online matching tool.
Loan Costs
A. Origination Charges
There are two categories of charges you pay your lender to secure your mortgage. These fees are very common, although not all lenders charge them to all borrowers.
In some cases, your lender will omit these fees to sweeten the deal, especially if you have really good credit. These fees should be incorporated into the APR stipulated for your loan. In other words, this means your lender is required to disclose them in advance.
- Origination charge: This is the standard fee lenders charge for the service of getting you a loan. Typically, this money is used to pay the broker or loan officer who got you the loan. It’s the originator’s commission on the deal. Origination charges are typically higher for borrowers with lower credit, but 1% of the loan amount is not unusual.
- Points: Points are a charge that you pay in exchange for a lower interest rate. Basically, they give you the option to pay more up front so that you pay less in interest over the life of your loan. Typically, one point costs 1% of the loan amount.
B. Services You Cannot Shop For
There’s a lot of administrative and legal work needed to finalize a home sale. The bank needs to make sure the loan it is making is backed by a valuable asset; the government needs to make a record of the deal, and collect whatever fees and taxes are allowed by law; and someone needs to deal with all of the paperwork involved. All that work can add up to a significant amount of money.
- Appraisal fee: Before the deal is finalized, your bank will likely want to hire someone to confirm the value of the house. Appraisers look at the size of the property, the features, the condition the house is in and the price of comparable properties recently sold in the area. Appraisers typically charge around $300 to $500 for their services.
- Credit report fee: This is the cost to the bank of purchasing your credit report from one of the credit reporting agencies. Not all banks pass this fee along, but don’t be surprised if they do. It should be no more than $30.
- Flood certification: If your house is situated on or near a flood plain, your bank may want documentation confirming its status. This involves paying for a certification from the Federal Emergency Management Agency (FEMA), and should be around $15 to $20.
C. Services You Can Shop For
If you want to lower your closing costs and you don’t mind taking the time to shop around, the following are services you are allowed to shop around for in search of a better deal.
- Title services and lender’s title insurance: The property’s title is perhaps the most important document in the entire home-buying process. This is the piece of paper that spells out who actually owns the house, and if it’s found to be invalid or fraudulent there can be big trouble. Title service companies research the title to ensure that it’s legitimate. Lenders also require the borrower to buy an insurance policy to cover the lender in case the title is later found to be defective. The cost of title services and lender’s title insurance varies significantly from state to state.
- Home inspection: Your lender may require an inspection of the home’s interior to check for damage, pests and other issues. Unlike an appraiser, a home inspector does not consider price and does not look at comparable properties. Instead, an inspector looks for any issues that may need to be repaired, or that may affect the home’s safety. A home inspector may get down and dirty, crawling into attics and poking around in the darkest corners of the house. A home inspection can cost anywhere from $100 to $500.
- Postage or courier: A lot of paperwork is involved in the sale of a home, and in some cases, your lender may hire a courier to transport the documents quickly and securely. If so, you may pay up to $60 for that service.
- Survey: This is an evaluation of your property to determine its boundaries as well as the location of fences, walls, gas lines and so on. This is required in some but not all states, and generally costs between $100 and $400.
- Attorney: closing and settlement fees. Your lender may hire an attorney to look over the paperwork and make sure all the contracts pass legal muster. The homebuyer gets to pay for that service, which usually costs between $500 and $700.
- Miscellaneous required services: The full list of services you get from a lender can vary. The Loan Estimate includes a line for extra charges that might appear.
D. Total Loan Costs.
A + B + C = D, your total loan costs. This is only one component of your total closing costs, however. Read on for the rest.
Other Costs
E. Taxes and Other Government Fees
Government recording fees are charged by the local government (usually the county) for making a public record of the sale. The fee varies depending on location, but will probably be less than $200.
Transfer taxes, sometimes referred to as transfer charges, are what some state and local governments charge on home sale deals. These vary widely by location, and in some places are not applied at all.
F. Pre-Paids
One cost to the closing process comes from the amount you have to pay in advance for items you will be paying regularly as a homeowner. Our closing costs calculator accounts for those as well. Some of these pre-payments are placed into an escrow account (a special holding account from which funds can only be accessed in certain circumstances) so that there is a reserve in case the deal falls through or you, for whatever reason, can’t make a payment at some point in the future. Other required pre-payments are made in advance to cover your first few weeks, months, or year in the house.
- Prepaid homeowners insurance: Homeowners insurance protects your house (and in some cases your belongings) against damage caused by bad weather, fire, theft and other unfortunate events (though it typically does not cover flooding or earthquakes). Most lenders require you to buy insurance on your home, and these policies are prepaid for periods of several months to one year. It is typical to pay the first 12 months of insurance up front at closing. The cost ranges depending on the coverage you need and where you live, but premiums can be as much as several thousand dollars a year, or just a few hundred.
- Up-front mortgage insurance premium: Depending on the size of your down payment, your lender may require you to pay for mortgage insurance. This can come with an up-front prepayment that you will owe at closing.
- Prepaid daily interest: If you are closing on your home in the middle of the month, you may need to pay interest covering the days until your first full month in the home begins.
G. Initial Escrow Payment at Closing
- Escrow homeowners insurance: Lenders may also require you to place some amount in an escrow account to cover homeowners insurance in case you fail to make a payment further down the line. This ensures that the home will be covered for some number of months even if you run into financial trouble. This, along with the property tax escrow described below, are most common when your down payment is less than 20%. Your Loan Estimate should show you the amount you’ll be required to put in escrow to cover two months of homeowners insurance.
- Escrow property taxes: Since the government, in some cases, can place a lien on a house that has unpaid property taxes, or even foreclose on that house, lenders try to make sure that borrowers stay current on their taxes. Tax liens have priority over mortgage liens, so the government would have claim on the house before the lender. An escrow account for taxes gives the lender a backup if you do miss some tax payments and makes a property tax lien less likely to occur
H. Other
- Owner's title insurance: An optional insurance policy that covers you, the homeowner, in the event that there are issues with the title. For example, if a prior owner of your home was foreclosed on and later wins a legal challenge against that foreclosure, your claim on the home may be found to be invalid. In that case, a homeowner’s title insurance policy would protect you from financial loss. Rates on these policies vary widely, but can cost over 0.5% of the loan balance.
I. Total Other Costs.
E + F + G + H = I. This is the total of all the non-loan costs.
J. Total Closing Costs.
D + I = J. This is the total of all your closing costs. It represents the sum of all your loan costs and all your non-loan costs. This is roughly the amount you should budget for, since it represents the lender’s estimate of what you will owe at closing time.
We’ve gone through some of the most common fees that make up your total closing costs. You can generally expect the total to be between 1 and 5% of the price you are paying to buy your home. Payment for closing costs can sometimes be financed with your loan, in which case it will be subject to interest charges. Alternatively, you can pay your closing costs in cash, similar to your down payment.
FAQs
How do you calculate closing costs? ›
You can generally expect the total to be between 1 and 5% of the price you are paying to buy your home. Payment for closing costs can sometimes be financed with your loan, in which case it will be subject to interest charges. Alternatively, you can pay your closing costs in cash, similar to your down payment.
How much is closing cost on a 400k house in Florida? ›Typically, the buyer closing costs in Florida will add up to around 1-3% of the purchase price.
How much of a down payment do I need for a 250 000 house? ›For a home price of $250,000 the minimum down payment would be $8,750. Your credit score is too low to qualify for a mortgage.
What is included in closing costs for buyer? ›Thus, closing costs include all expenses and fees charged by lenders and third parties, such as the broker and government, when the buyer gains ownership of a property. Closing costs may be one-time payments like brokerage or payments that recur on account of ownership such as home insurance.
Who pays closing costs? ›Closing costs are split up between buyer and seller. While the buyer typically pays for more of the closing costs, the seller will usually have to cover their end of local taxes and municipal fees. There's a lot to learn for first time home sellers.
What is usually the highest closing cost for the buyer? ›Closing costs typically range from 3%–6% of the loan amount. 1 Thus, if you buy a $200,000 house, your closing costs could range from $6,000 to $12,000. Closing fees vary depending on your state, loan type, and mortgage lender.
Can closing costs be included in loan? ›Yes, closing costs can be included in a mortgage loan. This is also known as “rolling” closing costs into a loan. The downside of rolling closing costs into a loan is that you will be paying interest on the closing fees, so you'll pay more for your mortgage in the long run.
Why are closing costs so high in Florida? ›Sellers in Florida pay more in closing costs than buyers do, because sellers are responsible for covering the real estate commission fees on the deal. These typically amount to about 6 percent of the home's purchase price.
How much house can I afford making $70000 a year? ›Let's say you earn $70,000 each year. By using the 28 percent rule, your mortgage payments should add up to no more than $19,600 for the year, which equals a monthly payment of $1,633. With that magic number in mind, you can afford a $305,000 home at a 5.35 percent interest rate over 30 years.
What's a typical down payment on a 300K house? ›Down payment options for a $300K home
For some, it could be literally nothing — not a dime. But most will need at least 3% of the purchase price ($9,000) or 3.5% ($10,500).
What credit score is good for buying a house? ›
It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.
Are closing costs tax deductible? ›Generally, deductible closing costs are those for interest, certain mortgage points and deductible real estate taxes. Many other settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including: Abstract fees.
What are the disadvantages of seller paying closing costs? ›You could have less profit. If you offer seller concessions and don't get that higher offer you were hoping for, your profit could suffer. Some buyers may be willing to pay a higher sales price if you pay for part of their closing costs, but if you have a buyer who doesn't, you could walk away with less.
How many days before closing is the final walk through? ›In most cases, the final walk-through is scheduled within 24 hours prior to the closing date. Your real estate agent can help you set a time with the seller's agent when you can be sure the property will be accessible and (hopefully) vacant.
Can I use a credit card for closing costs? ›Use Credit Cards
“But wait, can you pay closing costs with a credit card if you're in a pinch?” The answer is yes, but within reason. It's not unusual for homebuyers to use credit cards for at least some of their closing costs, particularly for those that occur early-on in the purchase process.
Closing costs for refinances and home equity loans are generally much lower than they are for new mortgages. Rolling closing costs into the loan might be worth it if you're not paying too much extra interest. This is especially true with a refinance that gives you a lower monthly payment.
Can you use your credit card while closing on a house? ›Making a Large Purchase on Your Credit Card
Yes, you can use your credit card before your closing date, but do your best to keep your purchases small and pay off your balance swiftly.
According to the experts at Royal Shell Real Estate, in most Florida real estate transactions the closing costs are split between the buyer and the seller. The seller typically pays 5% to 10% of the home's value in closing costs, while the buyer is responsible for 3% to 5%.
Are closing costs tax deductible in Florida? ›In most cases, the answer is “no.” The only mortgage closing costs you can claim on your tax return for the tax year in which you buy a home are any points you pay to reduce your interest rate and the real estate taxes you might pay upfront.
What are the average closing costs in Florida 2022? ›How Much are Closing Costs in Florida? Closing costs in Florida are, on average, $8,554 for a home priced at $375,368, according to a 2022 report by ClosingCorp, which provides research on the U.S. real estate industry. That price tag makes up 2.3 percent of the home's price tag.
Is 70k a year middle class? ›
A three-person middle-income household makes about $52,000 to $156,000 every year according to Pew's definition. A household of four would have to makes $60,000 to $180,000. Households of five making roughly between $67,000 to $201,000 are also considered part of the middle class.
How much do I need to make annually to afford a 400k house? ›The annual salary needed to afford a $400,000 home is about $165,000.
How much income do you need for 400k mortgage? ›What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your monthly income should be at least $8200 and your monthly payments on existing debt should not exceed $981.
How much would I pay monthly on a $1 million dollar mortgage? ›Monthly mortgage payments on a 1 million dollar home will depend on several factors, including your credit score, down payment, term, and interest rate. Generally speaking, on a 30-year mortgage with 20% down, you can expect to pay around $4,500 in monthly mortgage payments on a million-dollar home.
How much does a 300 000 mortgage cost per month? ›Monthly principal
For example, a fixed loan for $300,000 with a 30-year mortgage would result in monthly payments of $833.00 ($300,000 / 30 /12 = $833.33).
Most lenders are looking for 20% down payments. That's $60,000 on a $300,000 home. With 20% down, you'll have a better chance of getting approved for a loan. And you'll earn a better mortgage rate.
How accurate is credit karma? ›Here's the short answer: The credit scores and reports you see on Credit Karma come directly from TransUnion and Equifax, two of the three major consumer credit bureaus. The credit scores and reports you see on Credit Karma should accurately reflect your credit information as reported by those bureaus.
How much of a home loan can I get with a 720 credit score? ›You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
How to get your credit score to 800? ›- Pay Your Bills on Time, Every Time. Perhaps the best way to show lenders you're a responsible borrower is to pay your bills on time. ...
- Keep Your Credit Card Balances Low. ...
- Be Mindful of Your Credit History. ...
- Improve Your Credit Mix. ...
- Review Your Credit Reports.
The First-Time Homebuyer Act or $15,000 First-Time Homebuyer Tax Credit of 2021 is not a loan to be repaid, and it's not a cash grant like the Downpayment Toward Equity Act. The tax credit is equal to 10% of your home's purchase price and may not exceed $15,000 in 2021 inflation-adjusted dollars.
What can you write off when you buy a house? ›
- state and local real estate taxes, subject to the $10,000 limit.
- home mortgage interest, within the allowed limits.
- mortgage insurance premiums.
For most people, the biggest tax break from owning a home comes from deducting mortgage interest. For tax years prior to 2018, you can deduct interest on up to $1 million of debt used to buy, build or improve your home.
How can buyers avoid paying closing costs? ›Get the seller to pay your closing costs
Many buyers are able to avoid closing costs by getting the seller to pay them instead. This arrangement is known as seller concessions. Typically, the money comes out of the proceeds of the sale. So the seller doesn't have to cut a check, because the sum is deducted at closing.
Before you refinance, be sure to ask about closing costs. Because you are replacing your existing home loan with a new one, you may incur some closing expenses. On the other hand, you could also have negative closing costs. In this case, you might get paid to refinance.
What not to do while waiting for closing? ›- DO NOT CHANGE YOUR MARITAL STATUS.
- DO NOT CHANGE JOBS.
- DO NOT SWITCH BANKS OR MOVE YOUR MONEY TO ANOTHER INSTITUTION.
- DO NOT PAY OFF EXISTING ACCOUNTS UNLESS YOUR LENDER REQUESTS IT.
- DO NOT MAKE ANY LARGE PURCHASES.
The house should be empty for the final walk through - it's going to be a lot harder to check things like whether all the electrical outlets are working if there are couches and beds in the way.
Is the seller responsible for any repairs after closing? ›It is the seller's responsibility to inform the buyer of any damage. It is however the buyer's responsibility to insure the property from the date of exchange of contracts and to have the repairs carried out. The buyer will then have to make a claim on their insurance policy.
How do you calculate closing costs in Florida? ›So how much will you actually pay in closing costs for your home in Florida? To figure out an estimate of the amount you'll pay, simply multiply the price of your home by the typical closing cost percentage of 5% to 10%. For example, the current median listing price in Florida is $275,000.
What is the average closing cost on a house in Florida? ›How Do Closing Costs Work in Florida? After a home sale, closing is the final stage of the home-buying process. The average closing costs for Florida in 2021 were $8,551 with taxes and $4,484 without taxes, according to ClosingCorp. These costs depend on the home's value and its location.
How much should closing costs be in Florida? ›“Closing costs for buyers are typically between 2.5% and 3.5% of the price of the home,” explains Robinson. “In extreme cases [such as with a very high HOA fee] it could be 4%.
How much are closing costs on a $300000 house in Florida? ›
The simple overarching answer is that the average closing cost in Florida is 1.98% of whatever the final purchase price is. Since the average house in Florida is currently in the $200,000 to $300,000 range, that means the average range of closing costs is going to be $3960 to $5940.
Are closing costs High in Florida? ›Are closing costs in Florida expensive? Florida has some of the highest closing costs in the country. While most buyers can expect to pay about two percent of the home's value in closing costs, Florida buyers typically pay more. This has to do with regulations in the state as well as sales tax.
How much are FHA closing costs in Florida? ›The closing costs in your FHA loan will be similar to those of a conventional mortgage loan. These costs typically will be around 2% to 6% of the cost of your property. Your costs will be tied to things like your loan amount state the property is located in and lender fees.
What percentage is closing cost? ›Closing costs are typically about 3-5% of your loan amount and are usually paid at closing. What is included in closing costs? While each loan situation is different, most closing costs typically fall into four categories: Points layer & lender Origination fees layer.
Who pays transfer taxes in Florida? ›There are some jurisdictions that dictate who pays the tax, but for the most part, there is no mandate and it's up to the buyer and seller to negotiate who makes the payment. In Florida, the seller traditionally pays the transfer tax or documentary stamp.
Will Florida home prices drop in 2022? ›From June 2022 to July 2022, Florida's median sale price fell by 2.7%, from $410,400 to $399,200. And then from July 2022 to August 2022, it fell by 1%, and from August 2022 to September 2022 by 0.7%.