It can be overwhelming to navigate the complicated waters of real estate closing costs, especially if you’ve never purchased a home before. If you aren’t prepared ahead of time, you can find yourself way over budget when it comes time to finalize the purchase of your dream home.
Fear not! We buy houses in Idaho and have tons of experience in this area. We’ve broken down everything you need to know about the average closing costs in Idaho to help you make informed buying decisions.
What Are Closing Costs?
Closing costs are simply fees that must be paid in addition to the price of the property you are purchasing.
These costs can include surveys, taxes, title insurance, deeds, credit report charges, and real estate commissions, among others. All closing costs are due upon the finalization of a real estate transaction.
What are the Closing Costs in Idaho?
There are a few common closing costs you’ll encounter when purchasing a home in Idaho.
Appraisal Fees
An appraisal fee is a cost of having a professional assess the value of your home, property, or real estate. While prices vary depending on the size and location of your property, you can expect to pay between $300 to $500.
Property Survey
Property surveys are simply diagrams that detail the boundaries and exact measurements of your property. This is important for knowing where your home’s borders are and can come in handy if you ever have to settle a dispute with a neighbor.
Property surveyors normally cost between $350 to $500.
Home Inspections
Before you move into your new home it is required to have an inspection completed. During a home inspection, your inspector will check in detail:
- The roof, including gutters, chimneys, and skylights
- Potential problems with outdoor landscaping (roots, tree branches, pathways)
- The structural integrity of the house, including the foundation, doors, interior and exterior walls, and windows
- Bathroom appliances and plumbing
- Kitchen appliances and plumbing
- The electrical systems, including light switches and HVAC systems
A house inspection in Idaho will cost approximately $360. Companies that buy houses Meridian will want to make sure they are aware of all of the problems with a house ahead of time.
Title Insurance
The owner’s title insurance is designed to protect you from any issues with the title that the previous owner might have incurred. For example, if they have unpaid property taxes, the title insurance will protect you from any disputes that occur in the future.
The person selling the home usually pays for the Owner’s title insurance, however, it is not required.
There is also a Lender’s title insurance, which is a one-time fee paid to the lender handling your mortgage. This fee protects your lender in the event of ownership disputes and is normally paid for by the person purchasing the home.
Mortgage Costs
Conventional loans with down payments of under 20% are required to purchase Private Mortgage Insurance. This prevents the lender from losing money should you end up foreclosing on your home. This fee is generally between $640 and $3,200 in Idaho.
In Idaho, there is also a fee totaling 1% of your total mortgage which goes to your lender in the form of a Mortgage Origination Fee. In other words, you will be charged by your lender for putting together your loan.
Real Estate Agent Commissions
The real estate agent who helped you purchase your home will receive a commission for their work. Generally, this equals about 3% of the sale price per agent.
Miscellaneous Costs
You may also be charged for credit report fees, application fees, courier fees, home association fees, and any tax tracking fees that were required during the sale. If you have an attorney helping you buy real estate, they will have their own set of fees to consider as well.
In addition to your home inspection, you can also have separate inspections done for pests, mold, and lead-based paint. Each of these professionals will have fees.
Finally, some lenders require you as a buyer to pay ahead of time for items like property taxes. You will also have to pay for homeowner’s insurance and prove you’ve done so before the sale gets done.
Regardless of what type of real estate you are buying, you can expect to receive a Closing Disclosure from your lender approximately 3 days before closing. This document will detail all of your finalized closing costs so you won’t miss a thing.
Average Closing Costs in Idaho
The total closing cost fee you will pay varies depending on the price of your home, the type of property you’re purchasing, your mortgage lender, and your loan amount. Whether you pay for these fees in cash is also a factor.
But how much are closing costs in Idaho? Average closing costs in Idaho equal about $3,543.68. Most fees don’t exceed $4,724.91. Closing costs in the state are generally .89 percent to 1.18 percent of the home sale price, which is lower than the national average of 2 to 5%.
Who Pays Closing Costs in Idaho?
In Idaho, there are different closing costs that you as a buyer will be responsible for and a few that the person you’re buying from will have to pay.
As a buyer, you have the heftier burden when it comes to closing costs. You will be responsible for any inspections and surveys of the property, liens, appraisals, attorney fees, new HOA dues, and lender’s title insurance.
You will also need to pay courier fees from your lender, credit report fees, homeowner’s insurance, and tax tracking fees.
The seller normally pays for real estate agent commissions, any outstanding property taxes or HOA fees, the buyer’s owner title insurance, and their attorney fees. They are also responsible for paying off their mortgage when transferring the title to you.
Pros and Cons of Paying Closing Costs in Idaho
As a buyer, you have the option to roll the closing costs for your real estate purchase directly into your mortgage.
Pros
- This is a good option if you don’t have the money upfront to pay for the closing costs.
Cons
- It costs more in the long run.
- It will result in a higher interest rate for your mortgage.
There are also pros and cons to consider for paying your closing costs in full.
Pros
- Paying for closing costs in full is an incentive for the seller to accept a lower offer. If the seller has fewer additional costs to pay or isn’t required to split closing costs, they are more likely to accept an offer that is lower than the asking price.
- You won’t acquire any additional debt.
Cons
- It costs significantly more upfront.
- You end up putting the closing cost burden entirely on you instead of splitting it with the seller.
Should You Pay Closing Costs?
Ultimately, the decision to pay closing costs is a hefty, personal financial decision you need to carefully consider.
If you don’t have a large sum to work with when buying a home, it may make more sense for you to finance your closing costs and roll them into your mortgage. That way you can pay them off over time.
If the home you’re buying is a fixer-upper, rolling closing costs into your mortgage may be a better way to go, as you will need what money you do have to put into a renovation budget right out of the gate. Cash home buyers in Boise may prefer this option.
However, if you are purchasing a standard home that doesn’t need a ton of work, and you have the funds to cover the closing costs, it may make more sense to pay them in one go. This gets them out of the way and you won’t have to think about them again. It also helps keep the interest rate on your mortgage at a reasonable amount.
Benefits of Paying Closing Costs
The primary benefit of paying closing costs upfront is that it allows you to put in a lower offer on a home with multiple bids, and still be seriously considered. How can this be, you wonder? Well, sellers selling houses for cash like prospective buyers that are willing to take care of closing costs without requesting any seller concessions from them.
As a buyer, if you pay all of the closing costs upfront and don’t require the seller to pay for any additional fees or fix up anything, it simplifies the overall buying process. This can speed up the transaction and get everyone where they want to be much quicker, especially if they are selling a house by owner.
Conclusion
At first glance, real estate closing costs in Idaho can seem overwhelming and complicated. From inspection and survey fees to seller concessions there are many closing costs that you need to be aware of when it comes time to buy your home.
It is also important to weigh the pros and cons of financing your closing costs into your mortgage or paying for it upfront. Paying for it one go will require you to have more money on hand, but it will lower your interest rate and may even allow you to submit a lower bid.
Ultimately, you should stay calm and work with professionals who understand the complexities of this process and can guide you every step of the way.