Closing Costs Explained…weekly home buyer education for 9/23/12

by | Sep 23, 2012 | Real Estate | 0 comments

***if you know anyone who is thinking about buying a home, our next night class is:
     Saturday, October 13, 2012 at the Vancouver YMCA located at 11324 NE 51st Circle (corner of SR-500 & 112th/Gher Road) from 9am-12pm.  Remember….with reservation…we will throw in lunch!  🙂 
 Please go to www.learningtobuyahome.com, or www.traciedemars.com for information on ALL upcoming Free Community Home Buyer Classes.  I do keep all updated information, and directions there… I would love to hear from you about when you might like to see the classes.  These classes are for you, so please, I love your comments and feedback!!  🙂 ***

Happy Football Sunday~

Cool nights, sunny days, kids in school, and football on TV!  Ahhhh…fall…  Did I mention the pumpkin spice lattes, apple cider, squash, and the sight of pumpkins ripening?  Wait…the leaves are changing colors too!  Ok…I am done waxing poetical.  🙂  I love spring and fall…really I do.  Even though Fall just really started, it certainly doesn’t feel like it much yet, does it?  The housing market is still in a tailspin with low inventory and high demand and interest rates are still incredibly low.  I am still hoping that the market will balance out some this winter with rainier weather and the holidays.  Remember that statistically speaking, the best time of the year to buy a home for the cheapest price is the late fall/winter months…usually late October, November, December, January, and February.  Of course, we will talk more statistics next week so I am getting ahead of myself.  🙂

This week we are going to talk about fees.  There are fees associated with buying a home called closing costs.  Chris Berg with Pinnacle Home Mortgage (503-320-0925) was able to get me some information for you and it is as follows:

Closing Costs:

What are closing costs?  Who pays them?  What charges can I expect? What charges real fees and what are junk fees? These are all good questions and you should know the answers to all of them before you make an offer on a home.  Closing costs are a normal part of buying, or selling, a home.  Think about all the parties that are involved in a home purchase (excluding agents as they are paid directly from the seller in our area ).  You have your lender, title company, and appraiser just to name a few.  Your lender has 3rd party costs like credit reports, processing, and underwriting as well.  Then there is your escrow account that pays your taxes and insurance that needs to be paid at closing.  When you take this all into account it is easy to understand why there are closing costs. Who pays your closing costs?  You?  The seller?  Your lender?  The answer is any or all of these parties can pay these costs.  In most purchase situations the seller is asked to pay your closing costs but remember, this has to be negotiated in your initial offer.  If the seller decides that they aren’t willing to pay your costs and you don’t have the funds to pay them you can ask your lender to.  Your lender has the option to pay fees on your behalf for a slightly higher interest rate.  This option comes in handy when you are in a multiple offer type situation. What kind of fees are normal and what kind of fees are junk fees?  Good question.  Some lenders ask for an origination fee, usually 1% of the loan amount.  Some don’t have an origination fee but have hard costs like underwriting and processing.  Some have both.  Either set of fees are fairly normal but it is important to make sure that you talk to a reputable lender to make sure you are not paying too much in fees.  Then there are junk fees. Examples of these types of fees are administration fees, preparation fees, and application fees.
Feel free to contact me about closing costs or any other type of lending questions that you may have! I will be happy to answer them for you.  Chris Berg with Pinnacle Home Mortgage at 503-320-0925 and email chris.berg@pmblending.com.

Some more information:
Non-Recurring Closing CostsFees that are paid once and never again are called non-recurring. These fees are one-time charges for such items as:

  • Title Policies
  • Escrow or closing
  • Notary
  • Wire fees
  • Courier / Delivery
  • Attorney fees
  • Endorsements
  • Recording
  • State, County or City Transfer Taxes
  • Home Protection Plans
  • Natural Hazard Disclosures
  • Lender fees paid in conjunction with the loan on the HUD-1, line 800.

Recurring Closings Costs – The PrepaidsRecurring fees are those charges that you will pay again and again. They include such fees as:

  • Fire Insurance Premium
  • Flood Insurance (if required in your area)
  • Property Taxes
  • Mortgage Insurance
  • Prepaid Interest

The time of the year that you close will dictate how many pro rata months of premiums the lender will collect to hold against future payments of taxes and insurance. Remember that your monthly mortgage payment has four parts to it… Principal, Interest, Taxes, and Insurance.  The part of your payment that is taxes and insurance are put into an escrow account and paid for out of that.  You don’t need to worry about it.
Can a Seller Credit the Buyer for Closing Costs?Always check with your lender before you negotiate an offer that involves a seller credit because the lender might not allow it, or limit what you can get from the seller.

  • Usually we will get 3% of your closing costs from the seller.  For example, your offer is $200,000 and you ask the seller to pay 3% (or $6,000) of your closing costs.  The seller nets $194,000, but your loan amount (and mortgage payments) would be based on the $200,000.
  • Lenders will not let a borrower receive cash from a seller at closing, regardless of what you may hear at those no money down seminars.  You do need some money to buy a home…earnest money, inspection fee, and appraisal fee.

I hope this helps you to understand this a bit more, but please let us know if you have any questions!  We are, as always, here to help!

Please call, email, text, or even facebook me (at Tracie DeMars Real Estate) anytime with any questions, or if there is anything I can do to assist you with your home buying adventure! As your buyers agent, I am, as always, here to help!! 😀

Thank you again for your business and for your referrals!

…as always…if you have already purchased a home, or no longer would like to receive these emails from me, please let me know and I will be happy to remove you from receiving any more.

Thank you again for attending the home buyer education classes, and I hope that you will continue to refer the classes out to your friends, family, and co-workers. Upcoming class dates and times are located at www.freehomebuyerclasses.com. Just click on the link on the left hand side. Or you can go to www.learningtobuyahome.com and click the links.

We appreciate your referrals and word of mouth! Also, if you have somewhere that we can place the flyers at, please let me know….
:-D

Next Week: Current Market Stats…
Last Week: 5 mistakes that buyers make

Remember that you can always go to ‘Tracie DeMars Real Estate’ on Facebook for all of my weekly blogs and upcoming class dates/times/locations. I post the weekly blogs on there as well.

Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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