Your Closing Costs Matter

Straight Talk:

Your closing costs play a big role in the amount of funds you need to have in order to purchase your home. They vary significantly from state to state and can be the difference between success and failure.

Given this, you should estimate your costs, including your prepaid property taxes and insurance, to be at least 5% of the amount of your new home loan.

So, if your loan is $100,000.00 you can expect your closing costs will be somewhere around $5,000.00. So what do closing costs mean and where do you go to make up the difference?

CLOSING COSTS

You closing cost incorporate all the fees from your Lender, Broker, Banker, third party charges, in addition to your prepaid property taxes and home owner insurance.

Typical Fees break down as follows;

Lender, Broker, Banker:

Loan Origination or Broker Fee
Points
Underwriting
Application Fee

These Fees can be consider either Lender, Broker, Banker costs or Third Party Fees;

Tax Service Fee
Flood Certification Fee
Credit Report
Processing Fee

Title:

Settlement Fee
Title Search
Title Examination
Owner & Lender Title Policy
Wire Fee
Attorney Fee
Various Endorsements

Government:

Recording Fees
City/County Doc Stamps
State Tax
Intangible Tax

Prepaid:

Flood Insurance (where needed)
Home Owner Insurance
Property Taxes
HOA Dues

Misc. Third Party Costs:

Courier Fee
Overnight Fee
Appraisal
Survey
Home Inspection
Pest Inspection
Well Inspection
Septic Inspection
Assessment Certification

There can be many others and some that don’t apply, but by now you have the picture that it costs quite a bit to actually get a deed filed with a new mortgage.

COVERING THOSE COSTS

Looking at all the various expenses can be daunting. Thank goodness we didn’t include actual numbers.

The reality is, most of your closing costs should be covered by a Down Payment Assistance program, but, there is also a good chance they won’t be. Review the assistance program you’re applying for. If the program amount you qualify for covers your minimum down payment requirement of 3% for an FHA loan and money remains, you can use these additional funds to pay closing costs. The ence can then be structured so that the seller pays any remaining amount.

If you are using a Charity/not for profit, you will need to structure your purchase so that the seller pays not only your down payment, but your closing costs as well. Don’t let this seem daunting, it’s done on a regular basis and nothing says you can’t do it to!