According to a recent survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.
After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.
Keep in mind that if you are in the market for a home above this price range. your costs could be significantly more. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”
Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Posted by The KCM Crew
There are many potential homebuyers, and even sellers, who believe that you need at least a 20% down payment in order to buy a home, or move on to their next home. Time after time, we have dispelled this myth by showing that there are many loan programs that allow you to put down as little as 3% (or 0% with a VA loan).
If you have saved up your down payment and are ready to start your home search, one other piece of the puzzle is to make sure that you have saved enough for your closing costs.
Freddie Mac defines closing costs as:
“Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage. These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction. Closing costs are typically between 2 and 5% of your purchase price.”
We’ve recently heard from many first-time homebuyers that they wished that someone had let them know that closing costs could be so high. If you think about it, with a low down payment program, your closing costs could equal the amount that you saved for your down payment.
Here is a list of just some of the fees/costs that may be included in your closing costs, depending on where the home you wish to purchase is located:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services (insurance, search fees)
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting fees
Is there any way to avoid paying closing costs?
Work with your lender and real estate agent to see if there are any ways to decrease or defer your closing costs. There are no-closing mortgages available, but they end up costing you more in the end with a higher interest rate, or by wrapping the closing costs into the total cost of the mortgage (meaning you’ll end up paying interest on your closing costs).
Home buyers can also negotiate with the seller over who pays these fees. Sometimes the seller will agree to assume the buyer’s closing fees in order to get the deal finalized.
Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Posted by The KCM Crew
Think you just show up and make sure the house hasn’t fallen down? There’s a little more to it than that.
The final walk-through in real estate was designed so that the buyer can confirm the home is in the same condition as when they made their offer and had the home inspected. Its also an opportunity to make sure the seller has actually vacated.
From time to time, a buyer and seller will have negotiated any number of fixes during escrow. The walk-through gives the buyer a chance to make sure all the agreed-upon work has been done to specifications, and that everything is in working order.
Sometimes, buyers are so excited to close that they quickly whisk through the walk-through without taking time to inspect the property. This can lead to small issues once the buyers take ownership. On the other hand, the final walk-through can raise both positive and negative emotions during this final part of the sale process.
It’s smart to take the walk-through seriously. Don’t see it as simply checking a box. You should run all the faucets and check for leaks. Flush the toilet bowls, open every window and close it and make sure the appliances work.
Here are some tips for buyers to help complete a smooth and effective walk-through.
Don’t do the walk-through the day of closing
A walk-through can uncover repairs that need to be made, but that you didn’t know about before. If you do the walk-through the same day as the closing, there may not be time to get problems remedied.
It’s not uncommon for two walk-throughs to happen. The first identifies some issues for the buyer, and the second makes sure those issues were addressed.
The alternative is to push the closing back to address the issues. The problem here is that your lender may not have approved a delayed closing. It’s better to hammer out any issues in advance.
Use your mobile phone to check the outlets
Plug a phone into all of the outlets to make sure the electricity works. You want to avoid moving in all your stuff, only to realize some outlets don’t work, and you lack light in a bedroom.
Bring your phone and charger to the walk-through and test all the outlets. It’s quick and easy.
Be on the lookout for the sellers’ leftover belongings
Sellers are notorious for leaving junk behind, so take the time to check the garage and attic, and under the deck. The sellers may just assume you want their old paint cans or a propane tank for a future grill.
In fact, they should leave the place completely empty. Some left-behind items, such as the paint, can be toxic or require special provisions for disposal. For example, one seller left behind all kinds of used oil that needed to go to a certain, state-approved car repair shop to be disposed of properly. These unwanted items become yours after you close.
Be emotionally prepared for a surprise
Buyers often fall in love with a home that’s full of furniture, art and belongings. They see it as a home, and remember a warm feeling.
Fast-forward to the close of escrow and you’re faced with an empty home, which can feel cold, sterile or hollow.
Buyers are often surprised by how they feel entering an empty home. Not only is it absent any furniture and “stuff,” but sometimes an empty home shows its imperfections, too.
The sun may have slightly bleached floors, showing the outline of a rug. There may be carpet stains or holes in the wall from a flat-screen TV or paintings. An empty home tends to show poorly, so prepare yourself before the walk-through.
The journey toward homeownership is often a long one, filled with lots of excitement and ups and downs. The final walk-through is one of the very last steps of what could be a multiple-year process.
Consider the walk-through in advance and prepare for it mentally, emotionally and physically. Know what you want to look for, have a checklist, and keep your emotions and feelings in check. Doing so will make for a smooth ride to the close of escrow.
Posted by Brendon Desimone on Zillow