Common Closing Costs Question?

 Common Closing Costs Question?

What are Closing Costs?

“I want to buy a house that is 165,000, the taxes are 2,800, and my realtor says the closing costs are going to be 10,000 dollars, isn’t this pretty high? I want to ask the seller to pay but even if he does that still takes money out of my pocket because I can’t negotiate the price. I’m a first time home buyer, 6.25 rate and I am in New York.”

-Michael

I am assuming that your agent just gave you a ballpark figure of $10,000. It could be less, then his/her estimate.

Closing costs can be divided into three categories:

  • Lender fees (points, appraisal, credit report, underwriting, settlement and tax service fee)
  • Prepaid (interim interest, real estate taxes and escrow, insurance premiums and escrow)
  • Settlement costs (title insurance, settlement/attorney fees, city/county/state taxes, recordation and messenger fees)

I am sure your realtor is knowledgeable in his or her real estate market, but real estate agents aren’t trained to price out the total costs of closings. We may know what is included but the prices always vary. The $10,000 ballpark figure isn’t too far off.

It’s not uncommon to negotiate with the seller in order to have them cover the closing cost. The only problem is that most sellers will want to wait out your offer, mainly for another offer from someone else. They are really looking to wait for an offer in which they wouldn’t have to pay your closing costs. It becomes a sticking point, if you really want this home, you may be damaging your relationship with the homeowner, but negotiating. You could possibly lose out on this home.

My main tip for Real Estate Closing Costs is to do your research and ask around to familiarize yourself with the area where you are buying or selling so that you can understand what exactly you will be expected to pay.

Common Closing Costs

Closing Costs Average Charge Description
Application fee Around $300 A fee paid by a borrower to cover the costs of establishing a loan.
Credit check Around $30 Assessment of your income and financial status by a potential lender.
Attorney’s fee Around $350-$1,200 Fees could be even higher in some areas, but it depends on your attorney.
Appraisal fee Around $350 The charge for estimating the value of property offered as security.
Documentation Preparation Around $210 Technically, this covers the preparation of the final legal papers.
Points 1 point equals 1% of the total loan amount. These are fees lenders demand upfront in exchange for a lower rate, with each point equaling 1% of the mortgage value.
Inspections Around $90 Most every Real Estate transaction requires an inspection of the home to verify the integrity of the home.
Lender’s attorney fee Around $440 There is a possibly that the lender may wave this fee.
Title insurance Around $400 Protects your title – your ownership rights – from claims against it.
Title search Around $210 An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

Real Estate Closing Costs do really add up and quick. You need to understand what they are before you start your search because if can effect your down-payment, in turn effecting how much you can afford to mortgage. The Closing Costs is definitely something you should go over with your broker, so you are comfortable with what you will have too pay.

Hope this helps

Good Luck Michael, If you need any more help feel free to Contact Us again

If you know anyone in my area of Staten Island, New York that is in need of a good real estate agent, feel free to have him or her contact us as well.

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1 comment to Common Closing Costs Question?

  • Mike

    Walt,

    Thanks for posting my question on your site, I feel special lol. Just one more quick thing, I talked to my Agent and we were able to present an offer with the home owner accepting to pay for the closing costs.

    Thanks for your Help

    Mike

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