While your down payment may be the biggest home buying cost, you must consider how much you’ll pay in closing costs. Saving your down payment isn’t enough to buy your dream home. Want to learn how much it may cost you to close on your home? Read our article for your guide to Delaware closing costs.
Believe it or not, your down payment isn’t the only home buying cost you must cover to close on your dream home. Closing costs are a large chunk of your initial costs to buy a Delaware home. Before pulling the trigger, home buyers must do their homework to understand the home buying process and its costs.
An experienced Delaware real estate agent can provide insight into what to expect during your home buying journey when it comes to the process and its costs. A realtor can even offer a rough estimate of your closing costs according to the property and your preferred housing market.
Want to connect with a top-rated, Delaware buyer’s agent? Clever can help! Fill out our online form and we’ll be in touch to answer any questions you might have and introduce you to one of our local Partner Agents for a no-obligation consultation.
Want to learn everything about the closing-related costs to buy your dream home? Keep reading for your guide to Delaware real estate closing costs.
Closing Costs for Delaware Homes: What to Expect
It might be the first time you hear about it but you must save a lot more than your down payment to buy your dream home. Besides your down payment, you must pay your closing costs to purchase your home. Appraisal fees, home inspection fees, property taxes, and transfer taxes are some of the fees included in your closing costs.
According to recent data from Bankrate, Delaware buyers pay around $2,358 in closing costs. However, this study didn’t factor variable fees such as homeowners insurance, property taxes, transfer taxes, escrow fees, discount points, home buyer rebates, among other fees.
Typically, buyers pay between 2% to 5% of the purchase price in closing costs. If you decided to buy a Delaware home priced at the state median listing price of $289,500, you would pay between $5,790 and $14,475 in closing costs. Keep in mind that your location and property may influence your costs.
Common Closing Costs for Delaware Home Buyers
There’s no one-size-fits-all formula to crunching your closing costs numbers. However, you may obtain a general idea by understanding the most common fees your lender may charge you when closing on your home.
Don’t know where to start? Here are the typical closing costs Delaware buyers may need to cover to purchase their dream home.
- Lender Origination Fee: Buyers pay this fee to cover all lender’s home loan processing fees. Origination fees are typically about 1% of your loan amount.
- Home Appraisal Fee: Before closing on your home, the appraiser must provide a value for your property so the lender knows the current market value of your home. The home appraisal fee should range between $400 and $600.
- Title Examination Fee: In order to transfer the property to your name, the lender must search the property title to make sure no one has a claim to it besides the current owner.
- Deed and Mortgage Recording Fees: After signing the deed and mortgage to the property, these documents must be registered at your local register office. The fees should total around $500 depending on the value of your property.
- Credit Report Fee: To approve your loan, your lender needs to learn as much as they can about your finances, credit score, and history. Lenders should charge around $30 for pulling your credit report.
- Lender’s Title Insurance: Lenders may require you to buy lender’s title insurance to protect them against problems with your title. The cost may vary depending on the property value.
- Owner’s Title Insurance: While it isn’t required, you may consider getting an owner’s title insurance policy to protect yourself from problems with your property title. The cost will depend on your home value.
- Closing or Escrow Fees: These fees will cover the transfer of funds from escrow. Typically, these costs are split evenly between buyers and sellers.
- Transfer Taxes: The state of Delaware charges a transfer tax rate of 4% of the sale price. Typically, this tax liability is split evenly between buyers and sellers unless otherwise agreed.
- Property Taxes: Most lenders will ask you to prepay your property taxes. Delaware charges a 0.529% property tax rate from the property assessed value which may vary on a county and city basis.
- Flood Certification: Buyers must also cover the flood certification fee. This cost will pay for a third party to certify if the property is located in a flood zone.
- Property Survey Fee: Some lenders may require you to conduct a survey of the home to learn about the property and any easements. The property survey may cost between $500 and $800.
- Current HOA Fees: These fees may vary depending on your community. Typically, you’ll have to pay the current month or quarter Homeowners Association fees.
- Prepaid Mortgage Interest: If you close on your home before the last day of the month, your lender will ask you to prepay the mortgage interest charged between the date of closing and your first mortgage payment date.
- Home Inspection Fee: Before closing on your home, you must conduct a home inspection to verify the condition of the property. This fee will cover the property survey by a home inspector and the required home inspection report.
- Any Other State or Lender Required Inspection Fees: Your lender or state may require other surveys of the property such as radon, asbestos, water, or even pest inspections. The additional costs may range between $100 to $500 depending on the tests.
Other Costs to Consider
Before buying a home, you must consider all the recurring costs that come with homeownership. Utility costs, property taxes, maintenance costs, homeowners insurance, and HOA fees are some examples of typical monthly homeownership costs. Is your monthly income enough to cover these expenses?
Saving for a rainy day doesn’t translate into financial stability. Don’t underestimate the importance of financial security before buying a home. Before pulling the trigger, home buyers must get all their finances in order and prepare for the financial responsibility that comes with homeownership.
How to Save on Closing Costs in Delaware When Buying a Home
You may think saving on closing costs is next to impossible. However, you can save on your closing-related fees by taking advantage of the most common cost-saving strategies. You may consider asking your preferred bank if they offer loyalty programs for their customers.
Some financial institutions offer discounts on your origination fee or even mortgage points. Another strategy to lower your closing costs is avoiding prepaying mortgage interest by closing at the end of the month. You could also negotiate with the sellers to cover some of your closing costs.
However, we recommend you let your real estate agent handle these negotiations to get the best deal. An experienced Delaware realtor is a master negotiator who knows how to approach sellers and obtain the best outcome for you. If you choose to partner with a Clever Partner Agent, you may be eligible to receive even more discounts courtesy of your agent.
Our Partner Agents have agreed to give you a $1,000 home buyer rebate from their commission for your closing costs. You may use your commission rebate to cover your closing-related expenses or to pay for mortgage points. When you work with a Clever Partner Agent, you obtain the best deal and support on your home buying journey while saving on your closing costs.