A lot of times the only cost we associate with the purchase of NEW home is the down payment. Well, unfortunately, there are a lot of OTHER cost associated with the transaction and I wanted to help you dive in and figure out what to expect at the closing table.
First off, let’s just assume that we are talking a financed transaction. Cash deals are much cheaper when talking OTHER costs, so we will leave those alone for this example.
WHAT TYPE OF LOANS ARE Out THERE?
Conventional. There are a lot of CONVENTIONAL loan products. Typically, the conventional loan is the hardest to qualify for based on debt to income ratios, asset allocation and many other factors. The available conventional loans require anywhere from 3% – 20% down.
FHA. FHA requires 3.5% down and is typically easier to qualify for. There are FHA products out there that have grant money tied to the loan, allowing the consumer to effectively pay ZERO for the down payment.
VA. VA loans require ZERO down and the seller in the VA transaction is required to pay for other cost normally associated to the buyer’s closing costs. (If you would like more information about this particular loan, please contact us)
USDA. USDA loan is a loan designed for rural areas. Closing costs with these loans fluctuate. (If you would like more information about this particular loan, please contact us)
Below are cost associated with a typical 20% down Conventional loan. The purchase price in the example is $300,000 with a 4% interest rate on a 30 year term.
DOWN PAYMENT $60,000
NEW LOAN AMOUNT $240,000
MONTHLY PAYMENT – $1,450.05
PRINCIPLE & INTEREST $1,145.80
TAXES $216.75
HAZARD INSURANCE $97.50
DUE @ CLOSING $69,004
CLOSING COST $9,004
Your Detailed Closing Costs
14 Months of Insurance $1,365
4 Months of Taxes $867
15 Days of Interest $394
FIXED CLOSING COSTS
Title Policy $738.40
Escrow Fees $860
Loan Origination Fee $2,400
Recording Fee $40
Processing Fee $350
Tax Service $100
Doc Prep $350
Underwriting $200
Flood Cert. $40
Appraisal $450
Credit Report $60
Endorsement $100
Signing Accomodation (if applicable) $150
CPL Fee $25
Home Warranty $400
General Inspection $250
Termite Inspection $65
As you can see there are quite a bit of closing cost. Hiring a buyer’s agent that can effectively negotiate in your best interest is the most important thing to consider when choosing your Realtor. Often, we can get seller’s to pay for some if not all of the buyer’s closing costs.
Do yourself a favor, the next time you are in the market to purchase your next home, interview a handful of agents and get a good understanding of their credentials. The home purchase is arguably the largest financial decision for most families and having a Realtor who can navigate you through the “MINE FIELD” is essential!
If you have any questions about these fees, or maybe you’re a seller and want to know what fees you will incur, I encourage you to reach out! No hassle or obligation we would love to represent you in your next real estate transaction.
Your Real estate consultant “Explaining It all”
Clarissa
Clarissa Rodriguez 