The One Question First-Time Homebuyers Don’t Ask Anymore
No doubt, lots of questions pop up when you’re buying a home—should you go for a turnkey home, a fixer-upper, or something in between? An adjustable-rate mortgage or a more predictable fixed-rate one? Is there a homeowners association that will squelch your dreams of having a lime green front door?
You have questions about what is probably the biggest purchase of your life, and your real estate team should be on standby with answers. But experts say that over the years, one common question has surprisingly gone by the wayside: “What will my closing costs be?”
Far fewer buyers are asking this question, notes Russell Volk, a real estate agent with RE/MAX Elite in Bucks County, Pennsylvania. And it’s not because closing costs are less prevalent or negligible—it’s simply because first-time homebuyers think they already know the answer:
“With so many mortgage calculators available online—and with so many of them providing very detailed breakdowns of closing costs, as well as monthly payment breakdowns —buyers believe they have all the information they need to determine what their housing expenses will be,” Volk says.
Yes, there are some great mortgage calculators that layer in all sorts of data points to help you budget like a boss. (Recognizing this, we recently asked experts to share their favorite online mortgage calculators). And while this is a great place to start, you shouldn’t take the numbers for as a set-in-stone fact.
You probably won’t know the actual closing cost numbers until you receive your official Loan Estimate, a three-page standardized document that lenders are legally obligated to provide to you within three business days of receiving a mortgage application. This document goes far beyond what a mortgage calculator could, showing you details like your monthly payment with interest rates factored in, closing costs and estimates about taxes and insurance. It also contains important nuggets of information like whether your payments may change in the future and if there are any penalties for paying your mortgage off early.
But don’t wait until the last minute to fact check that mortgage calculator figure. Instead, ask your agent, who can get you closer to the nitty-gritty details of all those closing costs and unexpected fees like those for title insurance, a homeowners association, inspections, insurance, and more, Volk says. Not only do they wish you did, but you probably will, too.