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Closing Costs: What Every Maryland First-Time Buyer Should Know

  • Jeffrey Lewis
  • Jan 22
  • 4 min read

Hello, and welcome back to the blog. My name is Jeffrey Lewis, a local Real Estate Agent in Maryland talking all things Real Estate - empowering you to make the most informed decisions in your Real Estate journey. Today we're tackling - Closing Costs.


As a first-time homebuyer, navigating the world of closing costs can feel overwhelming. From appraisal fees to escrow charges, these costs are often an unexpected expense that can take many by surprise. But fear not—I'm here to break down exactly what closing costs are, what they include, and how you can prepare for them. Let’s dive in!



Understanding Closing Costs :What Are They?

In simple terms, closing costs are the fees and expenses you’ll pay when finalizing the purchase of your home. These costs are typically due on closing day—the day you officially take ownership of the property. Closing costs can range from 2% to 5% of the home’s purchase price, meaning on a $300,000 home, you might expect to pay anywhere from $6,000 to $15,000 in closing costs.

So, what exactly are these costs made up of? Let’s break it down!


Common Closing Costs

Here are some of the most common closing costs that first-time buyers should be aware of:

  1. Loan Origination FeesThese fees are charged by the lender for processing the loan. They typically range from 0.5% to 1% of the loan amount.

  2. Appraisal FeesAn appraisal helps determine the market value of the home you’re purchasing. Expect to pay between $300 and $500 for this service.

  3. Title InsuranceTitle insurance protects against any issues with the property’s title. The cost typically ranges from $1,000 to $4,000, depending on your location and the price of the property.

  4. Inspection FeesHome inspections are crucial to identify any potential issues with the home. The cost for an inspection typically ranges from $300 to $500.

  5. Prepaid Property Taxes and InsuranceYou may need to prepay a portion of the property taxes and homeowners insurance at closing. The seller pays for the portion of the year they own the home, and you’ll pay for the portion after you take ownership.

  6. Escrow FeesIf you’re using an escrow service, fees will be associated with managing the escrow account, usually ranging from a few hundred dollars to over a thousand.

  7. HOA FeesIf you're purchasing a home in a community with a Homeowners Association (HOA), there may be one-time transfer fees or dues due at closing. These can range from a few hundred to several thousand dollars depending on the community.


How to Prepare for Closing Costs

Now that you know what closing costs are, how can you prepare for them? Here are some practical tips to help you plan:

  • Get a Good Faith EstimateWhen you apply for a mortgage, request a Good Faith Estimate (GFE) from your lender. This document will outline all the expected closing costs, so you can budget accordingly.

  • Save EarlyStart saving specifically for closing costs early in the homebuying process. This way, you won’t be caught off guard when the time comes to pay.

  • Shop AroundDon't hesitate to get multiple quotes from different service providers—lenders, inspectors, title companies, etc. Shopping around can help you save money on some of these costs.

  • Work with a Realtor for Negotiation One of the best ways to manage closing costs is by working with a knowledgeable real estate agent like me. I can help you negotiate seller concessions, asking the seller to cover a portion of your closing costs. This can make a huge difference in your overall expenses.



Frequently Asked Questions About Closing Costs

Let’s tackle a few frequently asked questions about closing costs:

  1. What are closing costs used for? Closing costs cover a variety of fees related to finalizing the home purchase, including lender fees, appraisal costs, title insurance, inspection fees, HOA fees, and escrow services.

  2. Can I roll closing costs into my mortgage? Yes, in some cases, you can roll your closing costs into your mortgage. However, this means you’ll be paying interest on those costs over the life of the loan.

  3. Are closing costs the same everywhere? Closing costs can vary significantly based on your location, lender, and the type of loan you’re using. Be sure to check with local professionals to get an accurate estimate.

  4. Can I get a refund on closing costs? Closing costs are generally not refundable unless you’ve negotiated specific terms with the seller or lender. Be sure to clarify your options before committing to the purchase.


Wrapping Up

I hope this breakdown of closing costs has helped make the home buying process a little less daunting for you. The more informed you are, the better prepared you'll be when it’s time to finalize your home purchase. And remember, having a skilled realtor by your side—like me—can make the process smoother and help you save money along the way.


If you have any questions about closing costs or other aspects of buying a home, feel free to reach out to me directly. I’m here to help!


Here’s to the next move always being your best move!

 
 
 

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