Whether you’re a first-time homebuyer or this isn’t your first rodeo, buying a home can be quite the process.
For many buyers, the downpayment is the first thing that comes to mind in terms of costs that have to come out of their pocket.
Too often, closing costs are overlooked until it’s time to finalize the purchase, and buyers are left holding the bag.
Take a look at these Missouri Closing costs and see how they measure up so you can be prepared when it’s time to sit at the closing table.
Home Price Overview
The average home price in Missouri is reasonable, with most homes selling between the $100k and $200k range. This is certainly an affordable cost in comparison to many other states.
Big cities like Saint Louis may see higher prices, but overall the state has plenty of affordable housing options. When you’re ready for your Missouri Closing, keep your down payment in mind.
The down payment will be due at closing minus any earnest money you’ve already allocated. In the past, a 20 percent down payment was required, but today there are plenty of no down payment and very low down payment mortgages available.
Aside from your down payment, there are other closing costs which can add up quickly. If you buy a property within the average price range in Missouri, you’ll expect to pay anywhere between around $900 to $3700 in total closing costs.
So, how do you break these costs down? Let’s take a closer look at the other costs you can expect to pay on closing day.
Taxes
Whenever you close on a home, you’re expected to pay some portion of the taxes on that property. Your lender may require you to pay a full years’ worth of taxes in advance and put them into an account called an escrow account.
The escrow account is to ensure that your locality gets paid the taxes that are due. It may seem like a lot of money to pay upfront, but you’ll at least have peace of mind knowing that your taxes are taken care of.
The tax rate for your particular home depends on where it’s located. Tax rates vary by city or county so check with your new hometown to get an accurate rate.
Overall, Missouri has a lower property tax rate than states like New York or California. Ask your mortgage lender to give you a ballpark figure of the taxes you can expect to pay on the day you close on the home.
Missouri Closing Costs: Lender Fees
In addition to your taxes and your down payment, you’ll likely pay some money for various lender fees. If your lender charges points, include those in the final costs to close.
Other lender-based fees can include underwriting fees and loan origination fees. Some banks may waive these costs or reduce them if needed.
You’ll also pay various administrative fees like document filing fees and courier fees. Expect to pay these at closing, so be sure to include them in your estimate.
Lender fees can vary widely, and there’s no set rule in place for how much they can be in the state of Missouri. Your best bet is to shop around for a mortgage before you commit and ask about the various lender-related costs.
You’ll also be charged an appraisal fee by your bank which can range from around $200 to as much as $500 or maybe more. This fee is not negotiable and must be paid in order to appraise and get a loan for the home.
Other fees may include flood certification and pest inspection fees. Survey costs are also applicable in certain areas.
You may also need to pay something called PMI or Private Mortgage Insurance. This cost applies to every buyer who puts less than 20 percent down on a home. PMI costs vary depending on your credit score and the amount of your down payment.
Homeowner’s Insurance
Every home in America must have some form of homeowner’s insurance. This is to protect your property and keep its value in the event of an emergency.
The cost of homeowner’s insurance varies widely and it’s something you are allowed to shop for before you close. Consider asking your realtor if they recommend a good insurance broker who can help you get the best rates.
You’ll likely pay your homeowner’s insurance rate for a full year at closing. After that, the monthly cost will be factored into your monthly mortgage.
Missouri sees a variety of weather ranging from floods to tornadoes. The price of your policy will likely depend on where you live and if your area is considered high-risk.
Always make sure you are not in a flood zone or else you will need to purchase a flood insurance policy. This policy is completely separate from your standard homeowner’s insurance.
If you already have car insurance, find out if you can bundle your homeowner’s insurance with the same company. This is a good way to get a lower rate.
Closing Made Simple
No matter where you live in Missouri, understanding your closing costs in advance will help you be prepared on the big day. Get a full breakdown of all the costs from your lender to help you see the big picture.
If you’re looking to sell your home and get a great cash offer, be sure to visit our website or give us a call so we can help you sell your home fast.