Understanding Closing Costs for a New Construction Home
Building a new home is an exciting journey, but it can also feel overwhelming, especially for first-time buyers. One of the most confusing parts of the process for many people is understanding closing costs.
These are the various fees and expenses paid at the end of the homebuying process to finalize the sale and mortgage. They are separate from your down payment and can sometimes feel like a mystery. Ernest Homes always wants to make your home-buying process as transparent as possible.
That’s why we’re here to help you understand a bit about closing costs for a new construction home.
What are Closing Costs?
Put simply, closing costs are the fees associated with the final purchase of your new home and the finalization of your home loan. These are separate from your down payment and cover a range of expenses from your lender, title company, and other third parties.
They are essential to officially transfer the ownership of the property from us to you and to get your mortgage finalized. Typically, these costs range from 2% to 6% of the home's purchase price.
We know that number can sound a little daunting, but the key is to be prepared. At Ernest Homes, we're dedicated to helping you understand every detail, so you never feel surprised along the way.
Your lender is required to provide you with a detailed Loan Estimate after you apply for your mortgage, which will give you a clear breakdown of the costs specific to your home.
What Do Closing Costs Cover?
While the specific fees can vary by loan type and location, here's a general breakdown of what you can expect to find on your Closing Disclosure, which you’ll receive a few days before closing:
- Lender Fees: These are fees from the company providing your mortgage. They can include the loan origination fee (a fee for processing your application), as well as fees for the home appraisal and credit report.
- Third-Party & Title Fees: These fees go to other professionals and services involved in the process. This category includes charges for a title search and title insurance, which ensures the property is free of liens or ownership disputes. It may also include attorney fees and a fee to record the deed with the local government.
- Taxes and Insurance: You'll typically need to pay a prorated share of property taxes and the first year’s homeowner’s insurance premium at closing. Some buyers are also required to fund an escrow account, which holds money to cover future tax and insurance payments.
- New Construction Specifics: When building a new home, you might see fees that aren't typical for a resale. For instance, there could be fees for a final property survey or Homeowners Association (HOA) fees to help fund community amenities or services.
Your Trusted Partner in Homebuilding
Building a home is personal, and as a family-owned business, we feel so privileged to be part of your journey. We know you’re not just a customer; you're becoming part of our family. Our team is committed to making this process as transparent and enjoyable as possible.
We’re here to help you navigate every step, from selecting the perfect floor plan and selections in our Design Studio to understanding the final paperwork at the closing table.
If you have more questions about the homebuilding process, we'd love to hear from you. Contact us today or visit our website to learn more about the Ernest Homes experience. It's truly our honor to build your home.
