When buying a house in Oklahoma City, it’s important to recognize that the price of the home is just the beginning of your expenses. Closing costs can accumulate quickly, so it’s essential to budget for them in advance. Closing costs refer to the various fees and expenses associated with acquiring and transferring property ownership. These costs are typically paid at the closing of the deal, when the property officially changes hands. Below is a breakdown of what you can expect when it comes to closing expenses in Oklahoma City.
Loan-Related Closing Costs
If you’re using a mortgage to buy your home, there are several expenses associated with the loan:
- Loan Origination Fee: This fee is charged by the lender to process your loan application and typically ranges from 0.5% to 1.5% of the loan amount.
- Appraisal Fee: Lenders typically require an appraisal to determine the value of the home. The cost of an appraisal usually ranges from $300 to $500.
- Credit Report Fee: Lenders often review your credit score during the mortgage application process. You may be required to pay a fee to obtain your credit report.
- Underwriting Fee: This fee covers the costs associated with evaluating and approving your loan application. It typically ranges from $300 to $500.
- Title Search Fee: A title search is conducted to verify the property’s title for any issues, such as liens or ownership disputes. The cost typically ranges from $200 to $400.
Title and Legal Expenses
- Title Insurance: Title insurance protects both the buyer and the lender in case of any claims related to the property’s title. The cost of title insurance typically ranges from $500 to $1,500, depending on the property’s purchase price.
- Escrow Fees: An escrow agent will securely hold your funds and important documents to ensure all aspects of the deal are completed as agreed. Escrow fees generally range from $300 to $700.
- Attorney Fees: While not mandatory, some buyers choose to hire a lawyer to review their closing paperwork. If you choose to do so, attorney fees usually range from $100 to $500 per hour.
Property Taxes and Government Fees
- Property Taxes: Property taxes are prorated at closing. The buyer pays taxes for the time they own the home, while the seller covers taxes for the period they owned the property before selling.
- Recording Fees: These fees are charged to cover the cost of recording the property’s deed and mortgage with the county. Recording fees typically range from $50 to $150.
- Transfer Tax: In Oklahoma, a transfer tax is applied when property ownership is transferred. The cost varies depending on the county.
Other Closing Costs
- Homeowners Insurance: At closing, buyers typically pay for one year of homeowners insurance upfront. The cost of homeowners insurance can vary but typically averages around $1,500 per year in Oklahoma.
- Mortgage Insurance: If your down payment is less than 20%, you may need to pay for private mortgage insurance (PMI), which protects the lender in case of default. The cost of PMI typically ranges from 0.3% to 1.5% of the loan amount annually.
Seller-Related Costs
While the seller is responsible for their own closing costs, some costs may be shared or negotiated between the buyer and seller. For example:
- Home Inspections and Repairs: If the home inspection uncovers issues that need attention, the buyer and seller may negotiate who will cover the repair costs.
- Home Warranty: Some buyers negotiate with the seller to include a home warranty, which covers the cost of repairs or replacement of home systems and appliances.
Estimated Total Closing Costs
On average, closing costs in Oklahoma City range from 2% to 3% of the home’s purchase price. For example, on a $250,000 home, you can expect closing costs to range from $5,000 to $7,500.
How to Handle Closing Expenses
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Request a Good Faith Estimate (GFE): When you apply for a mortgage, your lender is required to provide you with a GFE within three days of submitting your application. The GFE outlines all estimated closing costs, helping you plan ahead.
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Negotiate with the Seller: It’s possible to negotiate with the seller to cover part of the closing costs. This is known as seller concessions.
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Shop Around for Services: Compare rates for services like title insurance and homeowners insurance to find the best deals.
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Inquire About Assistance Programs: Some lenders offer programs to help with closing costs, so it’s a good idea to ask about any available assistance.
In Summary
Understanding and preparing for closing costs is a crucial part of the home buying process in Oklahoma City. While these costs can add up, with the right preparation, you can manage them effectively. Be sure to review your closing disclosure before closing day to avoid any surprises. By planning for these costs, you can minimize last-minute stress and enjoy the excitement of homeownership.
