Mortgage Closing Costs
When you buy a home, your mortgage isn’t the only cost to plan for. There are a number of additional expenses that come up along the way, and while they may seem small on their own, they can add up quickly. These costs cover important services that help protect your investment and move the transaction forward. From inspections to appraisals, each plays a role in making sure the home you’re buying is in good shape and that everything is on track.
What Kinds of Costs Should You Expect?
One of the first things you might pay for is a home inspection. This is a key part of the process, since it helps you spot any potential issues with the property before moving forward. An inspector checks the home's major systems like electrical, plumbing, and the roof to make sure everything is working as it should. It’s a small upfront cost that can save you from major expenses later on.
If you're buying a condo, there might be a condo questionnaire fee. Your lender may need information from the homeowners’ association about the building’s financial health and rules. This process can take a few weeks, and the fee typically ranges from nothing at all to a few hundred dollars.
For homes with private systems, you may need a well and septic inspection. These tests make sure the water is safe to drink and the septic system is functioning properly. It’s an important step, especially in more rural areas where these systems are common.
Sometimes a property survey is required too. This confirms the exact boundaries of the land and can be helpful if there are any questions about fences, driveways, or neighboring property lines. Surveys aren’t always necessary, but when they are, the cost can vary depending on the size of the lot.
Then there’s the appraisal. This is when a licensed appraiser gives an estimate of the home’s market value. Lenders almost always require this to confirm the property is worth what you’re paying. You’ll usually pay this fee up front. And if you change lenders midway through the process, you might need to pay for another one.
Not all of these services apply to every home purchase, but together they can easily cost over $1,000. That’s why it’s a good idea to talk with your real estate agent and your lender early on. We’ll help you understand which costs apply to your situation and what you should budget for. Just remember that even if a deal falls through, you’re still responsible for the fees for services already completed.
Common Questions About Home Buying Costs
What Happens to My Earnest Money?
Earnest money is a deposit you make to show you're serious about buying a home. It's held in an escrow account by a third party and usually goes toward your down payment or closing costs if everything goes smoothly. Make sure the money is available in your account, because it may be cashed shortly after you submit it. If the sale doesn’t close, whether or not you get it back depends on the terms of your contract.
Do I Have to Pay My Real Estate Agent?
In most cases, buyers don’t pay their real estate agent directly. The seller typically covers the commission for both the buyer’s and the seller’s agents. Still, a good agent can save you money by negotiating on your behalf, spotting red flags in a property, and making sure your contract protects you.
What Are Mortgage Points?
Mortgage points are fees you can choose to pay upfront to lower your interest rate. One point equals one percent of your loan amount. For example, if your loan is $100,000, one point would cost $1,000. Buying points can be a smart move if you plan to stay in your home long enough to benefit from the lower monthly payment.
To figure out if it’s worth it, divide the cost of the points by the amount you’d save each month on your mortgage. That tells you how many months it takes to break even. If you plan to stay in the home longer than that, buying points could save you money in the long run.
Are Mortgage Points Tax Deductible?
In many cases, yes. You may be able to deduct the cost of mortgage points on your taxes, but it depends on your specific situation. Be sure to talk to a tax advisor to understand what applies to you.
Can I Pay More Points to Lower My Rate Even Further?
Yes, you can. Some buyers choose to buy multiple points to reduce their interest rate even more. Typically, each point lowers your rate by about a quarter of a percent on a 30-year fixed mortgage. It all depends on your long-term plans and how much you're comfortable investing up front.
What Is a “No-Cost” Loan?
A “no-cost” loan sounds great, but here’s what it really means. Instead of paying closing costs upfront, you accept a slightly higher interest rate. This option can work well if you don’t plan to stay in the home for very long. You’ll avoid paying more out of pocket now, but you’ll pay a little more each month.
Let’s Make Sure You’re Ready
Buying a home comes with a lot of moving parts, but you don’t have to navigate them alone. At 14 Days To Close, we’re all about simplifying the homebuying process so you can move quickly and confidently. Our streamlined approach is designed to get you from offer to closing fast — often in as little as 14 days.
Have questions or want to talk through your next steps?
Call us at (813) 343-4775 or schedule a free consultation and we’ll give you a call!