Closing costs are a mystery to Millennials

When it comes to buying a home, many Millennials are in the dark about closing costs, a key figure when calculating the prices they'll ultimately pay.

That's according to a national survey released Wednesday that found roughly 2/3 of potential home buyers between the ages of 18 and 34 don't know that they'll have to pay that final bundle of fees before they close the deal.

"If they go and are looking to purchase a home for $200,000, they probably understand there's a down payment and interest rate, but outside of that, they're not really educated on the other fees they'll have to pay,'' says Brad Chmura, senior vice president of ClosingCorp, sponsor of the survey and a provider of residential closing cost data and technology to the mortgage and real estate service industries.

The poll of roughly 1,000 adults , taken between Dec. 11 and 14, also found that it's not just Millennials who lack such knowledge. Among all prospective home buyers, regardless of age, 34% said they are "not very'' or "not at all'' aware of closing costs.

Those fees, due at the end of the home-buying process, before the property title is handed over to the new owner, can add up. They encompass fees such as title and escrow, lender fees, and the price of an appraisal, which can vary widely according to the location of the property and the loan type. The closing costs can be paid by either the purchaser or seller.

Not having a total grasp of those fees, is just one of the hurdles Millennials face on the path to home ownership since many are also dealing with student debt, constrained financing and difficulty getting a foothold in a still recovering economy, Chmura says.

When potential home buyers do learn about that final tab, it's often from realtors, or by doing their own digging for information, according to the ClosingCorp poll. But such vital details should come from a variety of voices, Chmura says.

"The Millennials, who are typically more tech savvy than their predecessors, are still getting the main source of information from the real estate agent,'' he says. But "it's a complex process to follow and so we feel that the consumer should be educated from multiple ... sources. Everyone from the real estate agent to lenders, to family members as well who've been through the transaction.''

Eric Roberge, who founded his financial planning firm in Salem, Mass., to specifically serve Millennials, has found that many are unprepared to buy a first home.

One of his clients, for instance, wants to buy a home but doesn't have the money to cover the down payment, closing costs and any emergency financial needs that might crop up after purchasing a house.

"That happens a lot,'' he said of Millennial buyers. "They're not taking into account the entirety of the cost. They're just looking at the down payment.''

Such knowledge should be taught to young adults wherever they work, he says.

"Nobody is getting home-buying education in school so where do they learn?'' he says. "From reading articles. From parents. From trial and error and that's bound to cause issues. ... Those companies that employ a lot of Millennial-age professionals, it should be their responsibility to provide them with education.''