You’ve budgeted for your down payment and feel ready to close the deal—until you hear about a list of surprise expenses you hadn’t planned for. In this episode, Ralph unpacks the details of one of the most overlooked parts of the homebuying process: closing costs.
Check out the full podcast episode here
You’ll learn what closing costs include, how to estimate them early, and why they’re an essential part of wise financial stewardship. With practical tips and a faith-based mindset, Ralph helps you plan ahead so you can approach your closing day with peace, confidence, and the keys to your new home in hand.
Chapters:
- 00:05 - Understanding Closing Costs
- 01:10 - Understanding Closing Costs in Home Buying
- 04:47 - Understanding Closing Costs
- 07:30 - Understanding Closing Costs
- 08:56 - Transitioning to Home Ownership Costs
Takeaways:
- Make sure you ask for a good-faith estimate early on in the home-buying process.
- Understanding what closing costs can include helps you budget better and avoid surprises.
- It's crucial to include closing costs in your savings goal along with your down payment.
- Educate yourself on common closing costs to avoid the last-minute scramble for cash.
Links referenced:
financiallyconfidentchristian.com/master
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Episode Transcript
You found your home, you've got the mortgage lined up and the finish
line is in sight, but then you hearabout something called closing costs.
Start asking yourself, whatexactly are these extra fees
and how do I prepare for them?
So don't become a lastminute stressful surprise.
Well stick with me today 'cause I'mgonna give you the tolls that you need
to handle this part of the process.
(00:35):
Hey there.
Welcome back to your DailyFinancially Confident Christian.
I'm Ralph and it's greatto be with you again.
This is the show that helps you answerthat question, how can I become a
financially confident Christian?
And we're continuing our series dealingwith the stress of money worries.
In the last few days, we've beentalking about the home buying process,
and we're deep into that topic of homeownership, and that is a significant
(00:57):
financial decision for most people.
And if you've been followingalong, you're doing amazing work.
You've assessed your affordability, you'veprepared financially, and even maybe
started navigating the mortgage process.
But today we're gonna take it a stepfurther and we're gonna talk about a part
of the home buying process that oftensurprises people and can be a significant
(01:18):
source of stress right at the end.
And that's called closing costs.
Think about it.
You've saved for the down payment.
You've got yourself already.
But what about those extra fees?
So let's tackle that question today.
Don't let closing costscatch you off guard.
How do I understand?
And more importantly, howdo I prepare for them?
(01:38):
Maybe you know this feeling all too well.
You focused intently on saving for thatdown payment and it took years and months
of struggles, which is a huge goal.
And then you realize there's awhole other set of expenses like
this down payment was enough.
And then you've got this, thisclosing cost to cover at, what
do we call the closing table?
These are things like loan originationfees, appraisal fees, title insurance.
(02:02):
There's a whole list of thesethings, legal fees, even prepaid
property taxes and insurance.
And the struggle here is thepotential for a large, unexpected
financial burden, right?
When you thought you were finally ready,you thought you were ready to move into
this new home, and all of a sudden thelender says to you, Hey, but guess what?
Don't forget about your closing costs.
(02:23):
Not knowing what these closing costsare, how much they're gonna be, or
how you're gonna budget for them.
Let me just tell you right now.
That creates significant anxietyand for many people, it makes the
end of the home buying process feelincredibly stressful potentially.
And I hate to say this, even jeopardizingthe purchase, if you haven't saved enough.
Unfortunately, I've seen deals fallthrough at the end because you didn't
(02:47):
have enough money for closing costs.
But here's the thing.
You need to understandthis from the beginning.
Closing costs are normal and they'rean unavoidable part of buying a home.
It's just part of what we have to do.
And being surprised by them at thelast minute goes against that principle
of careful financial planning.
And as we talked about the lastfew days, counting the cost.
(03:09):
Remember that builder analogy fromLuke chapter 14 about building
the tower and counting the cost.
That cost includes all the cost to finishthe tower, not just the foundation.
Preparing for these closing costsis an act of diligent stewardship.
That's what the show is all about.
We need to anticipate all thenecessary expenses involved in the
(03:30):
transaction to ensure that you havethe resources ready to finish it.
It's about having foresight and managingGod's resources wisely for the entire
process, not just the most obvious part.
For a lot of people, the most obviouspart is, Hey, let's go shopping.
Let's go buy a house.
Oh, now we need down payment money.
And then you don't think about, yes,that's right, but you're also going
to need money for those closing costs.
(03:52):
So now you're saying,Ralph, great, you had me.
Now all of a sudden you'redropping something else on this.
How do I prevent closingcosts from becoming this last
minute stressful surprise?
Well, here's what I'mgonna tell you as normal.
It starts with educating yourselfon what closing costs typically
include, and you can get an estimate.
In fact, there's a requirementthat they give you a good faith
(04:13):
estimate as to closing costs.
Ask the realtor to get youthis information and get
it early in the process.
That way you can activelyinclude that in your savings goal
along with your down payment.
So even when you're starting to thinkabout, am I ready to buy a house?
And you're start thinking aboutthat down payment, start thinking
about those closing costs as well,because that proactive approach
(04:35):
is gonna ensure you got the totalfunds needed, ready for closing day.
You're not gonna get that.
Call from the settlement attorneythat says, oh, by the way, don't
forget to bring a check for$25,000 for your closing costs.
So here's your one action stepfor today, specifically designed
to help you understand and moreimportantly, prepare for closing costs.
(04:56):
I want you to start by educating yourself.
Learn what closing costs are.
Spend about 15 or 20 minutes and researchcommon closing costs in your area.
Talk to a realtor, talk to alender and say, Hey, I just don't
understand what this is all about.
Can you give me abreakdown of these things?
And I've said before.
These typically include thingslike loan origination fees.
You might heard the term called points,appraisal fees for your home title,
(05:19):
insurance attorney's fees recorded.
Listen, when you see a settlement sheet,there's a list of about 15 or 20 things.
And a lot of times the lender's gonnarequire you to prepay property taxes
maybe for even a year in advance.
And also your homeowner'sinsurance premiums.
They wanna make sure that you've gotthe resources ready so you don't default
on this loan right after you get it.
(05:39):
So make sure you're ready.
Get that early estimate.
So when you're seriously talkingabout a mortgage loan, go, you know,
after that pre-approval, start tolook at, ask them for a loan estimate.
Like I said, this document's requiredby law and it details the estimated
interest rate, the monthly payment, andan estimate of all those closing costs.
And this is really your firstconcrete idea of what to expect.
(06:03):
Now, here goes into the planning part.
You've got to plan to include thoseclosing costs in your savings goal.
Add that estimated amount asclosing costs to your down payment.
We talked about that in episode 1 71,Adjust your savings plan to aim for this
total amount needed by the closing day.
So that you're not surprised bythis, you know you're ready, you've
got the, down payment money andyou've got your closing costs ready.
(06:27):
And now you might be saying,Ralph, okay, why does this help?
Because here's the thing.
You are going to struggle.
There's going to be stress, there'sgonna be last minute mortgage things
that the last stress you need isto get a call from the, paralegal
who's working on the closing and say,oh, by the way, we made a mistake.
Your closing costs are gonna be thismuch more, and you're, you're scrambling.
You're like, I've already paid for this.
(06:47):
I, I bought furniture.
You know, I've got the,the movers ready to go.
I wasn't expecting this.
Where am I gonna get this money?
But if you do what I'vetalked about, you plan ahead.
It's going to significantlyreduce the stress of that.
You're gonna educate yourself.
Maybe there's some things inthat that you can shop around
and get a better price for.
And it's gonna replace that unknown withconcrete numbers and you can include
(07:10):
that in your savings goal so that youdon't have that last minute scramble.
And you can go to closing with asmile and confidence and peace,
knowing all the costs are covered.
And the next step is hand you the keys.
Welcome to your new home.
Let's pray together now.
Father God, we just thank you forproviding for all of our needs.
(07:30):
Lord, we confess that the variouscosts involved in buying a home.
like closing costs can feelconfusing and stressful and
just absolutely overwhelming.
Please grant us clarity, Lord, anddiligence as we educate ourselves
on these expenses and really workto get those early estimates.
And overall, Lord, we ask you to helpus be wise stewards by including those
(07:52):
closing costs in our savings goal, andguide us in preparing thoroughly for the
financial realities of home ownership.
Ensuring we can approach closingday with peace just knowing that all
the necessary funds are in place.
And we ask this as always,Lord, in confidence.
In Jesus' name.
Amen.
Listen, don't let closingcosts catch you off guard.
(08:14):
Understand what they are.
Get an early estimate and includethem in your savings plan.
'cause this is the key to asmooth and peaceful closing day.
You are moving towards freedom.
If this episode helps you, I'mgonna encourage you to share it
with somebody you know who mightbe going through the same process.
You can find resources and connectwith our show at our website
(08:35):
that's at financially confidentchristian.com, and I've got a
special gift for you on your journey.
Go to financially confidentchristian.com/master and get a free copy
of my book, mastering Your Finances.
It's a great book.
It's a powerful read, designed as apoint to help you break that cycle of
financial shame and step into confidence.
(08:56):
Again, go to financiallyconfident christian.com/master.
Now, tomorrow we're gonna move into thefinal stage of the home ownership process.
And that's how to budgetfor the ongoing cost.
A lot of people don't think about this.
They got through the mortgage, they gotthrough the closing costs, they got moved
in, and now of a sudden it's like, waita minute, I wasn't anticipating this.
So we're gonna talk about propertytaxes, we're gonna talk about
(09:18):
insurance and those unexpected repairs.
So your home remains a blessing becausewe don't want it to become a burden.
So you don't wanna miss that.
So make sure you join me tomorrow.
Now let's all go out thereand be financially confident.
Christians, you can do this.
I have confidence in you.
Have confidence in yourself.
Stay financially savvy.
God bless you, and youhave a great day today.
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