Self-made millionaire Barbara Corcoran, who made her fortune building a real estate empire that she sold for $66 million in 2001, says there are a handful of common mistakes you’ll want to steer clear of when buying your first home.
And “the biggest mistake that first-time homeowners make is they forget that they need closing costs — not just the down payment of say 10 or 20 percent,” she says.
Closing costs vary depending on where you live and the type of loan you choose, but you can expect them to tack an additional 2-5 percent of the total cost of the home onto the final price. That means, if you’re buying a $200,000 home, you’ll owe anywhere between $4,000 and $10,000 in closing fees.
For the median U.S. home, these expenses exceed $13,000.
The types of fees you can expect at closing include recurring costs like property taxes, homeowners insurance, prepaid loan interest and title insurance, plus nonrecurring costs like an inspection fee, application fee, appraisal fee or credit report fee for pulling your credit score.
To get a better idea of exactly what your costs will add up to, use a closing-cost calculator.
Not account for closing costs is a mistake the real estate queen admits to making herself. Corcoran tells Make It: “When I bought my first home I showed up at the table to close without the closing costs. Thank God I was able to borrow it from the very nice seller or I couldn’t have closed on the place.”