Understanding Closing Costs: What Homebuyers Need to Know

In this blog, I answer some of the most common questions about closing costs that I get asked as a Realtor®.

1. What are Closing Costs: Closing costs represent the fees and expenses you'll have to pay at the end of the home purchase process (at the closing). These costs can vary but typically include taxes, appraisal, title insurance, legal fees, and other expenses incurred during the home-buying process.

2. How Much to Expect to Pay: Closing costs can range from 2-5% of the home's purchase price. Typically, buyers should expect to pay anywhere from $2,000 to $5,000 in closing costs, although this can vary depending on the state and the home's location. It's essential to keep this in mind when budgeting for a home purchase.

3. Negotiating Closing Costs: Buyers can sometimes negotiate the amount of the closing costs they are responsible for. For example, a buyer can ask the seller to pay for some or all of the closing costs as part of the negotiation process. A Realtor® should have the skills to negotiate for their client to alleviate some of the financial burdens of closing costs.

4. No government programs directly cover closing costs in Tennessee. However, some government programs assist homebuyers with down payments, which can indirectly help with closing costs. One of these programs is the Tennessee Housing Development Agency (THDA) Great Choice Plus program, which provides down payment assistance of up to 5% of the home's purchase price for eligible homebuyers. Additionally, some municipalities or counties in Tennessee offer down payment assistance programs or grants that can help reduce closing costs for qualified homebuyers. It's worth researching and exploring these options to determine if they could benefit.

By understanding these crucial factors about closing costs, buyers can better prepare themselves for the financial commitments of buying a home. Thus, buyers need to have the right Realtor® that can help from beginning to end, providing experienced lenders' alternatives for buyers to get the best option. I proudly can say that I've worked with some dedicated lenders that I would love to share with you to serve you and ease the usual stress of purchasing a property.