PSI Virginia Real Estate Practice Exam

What is the typical range of closing costs that home buyers may pay based on the purchase price of their home?

1. 1 to 3 percent

2. 2 to 5 percent

3. 5 to 10 percent

4. 10 to 15 percent

The correct answer is: 2 to 5 percent

Closing costs for home buyers typically range from 2 to 5 percent of the purchase price of the home. This percentage can encompass a variety of expenses including, but not limited to, lender fees, appraisal costs, title insurance, and prepaid property taxes or homeowners insurance. This range is generally accepted as a standard estimate in the real estate industry, providing buyers with a reasonable expectation of the additional costs they will incur outside of the purchase price of the home itself. Other responses such as 1 to 3 percent would be considered too low for most transactions, as it would not adequately cover all the necessary expenses involved in closing on a property. Similarly, ranges like 5 to 10 percent or 10 to 15 percent may lead buyers to overestimate their potential costs, creating unnecessary apprehension regarding the affordability of purchasing a home. Thus, the 2 to 5 percent estimate aligns with typical experiences of home buyers.