Tips on house closing costs, house closing documents and other need to know information when closing on a house.

For those trying to sell a home this summer, the real estate climate can feel unseasonably chilly. Truth be told, this is one of the most difficult selling environments in recent history, so if you are feeling a bit frustrated and anxious, you are far from alone. All across the USA homeowners are pulling out the stops to try and encourage sales, but successful transactions are getting as scarce as hen’s teeth.

But before you despair, follow these tips offered by those with lots of experience marketing homes in bear markets:

• Calculate your heating costs going forward:

Especially if you live in a cold climate, consider the financial impact of keeping your house warm through the coming winter months. Fuel oil prices are likely to rise, and the expense of heating a home across a severe winter can add thousands of dollars to your overhead. If that is the case, you might want rebate a portion of that projected cost to your buyer, as an incentive to take the property off your hands while the weather is still warm. Don’t tell them that’s what you’re doing; just discount the price or add extra money to their side of the transaction by offering to pay some of their house closing costs.

• Sweat the small stuff, but make sure you first take care of any “deal killers” that might be scaring away potential buyers:

Broken doorbells and doorknobs, cracked window panes, and dingy carpet or countertops can make a property look worn out, so consider fixing these relatively small items to dress up your home and make it more appealing. But first evaluate your property with the help of a Realtor or building contractor, to find out if you have any “deal killers”. If the house needs a new roof and has stains on the ceiling from rain leaks, for instance, it could be driving away all potential buyers. The same goes for obvious problems like the presence of potentially hazardous mold or a defunct heating and air conditioning system. Unless you address these problems – either by taking care of them or by lowering your asking price to account for them – buyers will not want to get involved.

• Add curb appeal:

If your home looks great from the curb, buyers will want to have a closer look. If it looks a bit shabby, they will just keep driving. Start with the entryway, which is what first attracts the eye, and make it look spectacular. Don’t invest a lot of money; just buy a new door or paint the one you already have and add some nice looking but inexpensive flowerbeds, potted plants, or border fencing to create a beautiful focal point leading into the home. Do-it-yourself landscaping involving some rich-looking mulch and colorful flowers can make a drab property pop like eye candy, and it doesn’t have to cost much to get dramatic results.

• Paint is the best makeup in the world for cosmetic enhancement of a home:

Paint is the most cost-effective tool for adding value to your home. Avoid expensive paints and designer hues in favor of contractor grade paint in neutral colors. Avoid dead white, because creamy shades are warmer and more inviting, and use complimentary semi-gloss colors to highlight window and door frames. A primer coat will help to cover stains and blemishes, and caulk is cheap so use it liberally to get your money’s worth from the project. For a really top-notch look, three coats of paint works miracles, and in small spaces like bathrooms this can be done without going overboard on your budget.

• Take an aggressive approach to showcasing your property:

Although it can be difficult and inconvenient, strategically redecorating your home could lure buyers and close a sale, making it well worth the effort. Don’t do a huge makeover; just concentrate on tactical “staging” of each room. Study the way that builders decorate their model homes for professional insight into how the process works to help market property. Remove all excess furniture and clutter – storing it off premises if possible – to make the rooms look larger and more spacious. You can hire professional real estate staging companies to do this, or consult an experienced Realtor for tips on how to make each room like its very best. Empty closets to show off their storage capacity, keep the property immaculately clean and neat for each and every showing to buyers, and use flattering lighting to highlight each room.

You might find that implementation of a simple and cost effective idea or two from this list might give you the advantage necessary to turn a lifeless listing into a successful sale. And that could be cause to celebrate before the last “hoorah” of summer arrives and qualified buyers begin to hibernate for winter.

house closing costs

We all agree, purchasing a home will be, for most of us, the largest purchase you will make in our life. You have found your future home, arranged for financing and are now waiting for the house closing date. But to many people’s surprise, there are other monies that will need to be disbursed before or on the closing date.

Some of the upfront costs you should plan on paying when purchasing a home include appraisals, inspections, earnest money, lenders fees, title company fees, and house closing lawyer fees. It is vital that you plan for these fees – speak to your real estate professional or your lender who will be able to outline and estimate all of these costs for you. The total cost of these various expenses and fees can run into the thousands and even the tens of thousands of dollars. It pays to be prepared.

You must also be careful of the 100% mortgages or no-money down loans. A no-money down loan does not mean that there aren’t any costs associated with the loan. In reality, these types of loans allow the buyer to borrow 100% of the purchase price of the home however the buyer is still responsible for the numerous other costs mentioned above.

You should also keep in mind that you will have to pay a portion if not all of that year’s property taxes. Typically, property taxes are called on and required to be paid in full as the home closes. A buyer, upon closing the home, will be called to pay his/her share of the annual bill as it is pro-rated. You may want to enquire about the property taxes of a specific house, or neighborhood, before signing the purchasing contract. Some neighborhoods are taxed more heavily than others.

There is however a way of “avoiding” having to pay some or all of house closing costs. As a borrower, you do have the right to ask a seller concession to cover your house closing costs and pre-paid items. This makes it so you do not have to come up with any money at all for house closing costs.

A seller concession is worked into the purchase agreement and the seller will end up paying for some or all of the house closing costs. The seller concession is either a flat fee or a percentage of the loan amount. This is a fairly common practice, particularly in depressed real estate markets.

As for pre-paid items, they generally consist of pre-paid interest and escrows. Many people run into difficulty reading and understanding the multiple costs that are involved with purchasing a home. Because of this, do not take any chances and talk to a loan consultant or mortgage broker. This will help clarify your financial obligations.

Purchasing a home is an exciting adventure. Don’t let your fear of the unknown spoil this joyous event. Being prepared and well informed will avoid you being shell-shocked when the time comes to paying the bills. The more informed you are, the better prepared you will be for the many upfront costs associated with buying a home.

house closing costs

The first task is to define what you can afford. This saves a great deal of inconvenience later if you realize what is within your budget. In order to figure this out, meet with a mortgage broker or lender. This defines the pre-approval process. If you are serving as your own general contractor, be sure that the lender also offers “sweat equity” loans so that you can get the best deal. After evaluating your income, your credit, and your debt to income ratio, your lender will be able to give you an answer. Usually within 24 to 48 hours, you will know what your finances allow in terms of affordability. Additional information such as required escrow funds and down payment at house closing time is also provided most of the time.

Once you have been pre-approved, you will then figure out the exact costs of the project. For most people, it is recommended that they take their pre-approval figure and reduce it by 15 percent. This allows some built-in room for extra expenses along the way. Once you have selected your modular home style, design, and amenities, manufacturing costs will be secure. It will be your task with your builder to specify all the other costs that will be needed to finalize your house closing costs form with your lender. These expenses will include excavation and landscaping costs, finishing work after the set, land lot costs, permitting expenses and several others. These are important to know at the beginning so you can hold your builder accountable.

When ready for preparing the house closing documents, your lender will need engineered drawing plans for your modular home, the home’s order sheet with specifications, a complete list of costs from your builder, a legal description of your lot, two years of employment history, and two months of recent bank statements. In addition, the lender will order an appraisal and title search for the property to make sure the appraisal covers the financing and that no liens are attached to the property. These are all standard steps of the financing process.

Depending on your situation, you likely will have a construction loan during the construction period before the actual mortgage loan is closed at completion. A construction loan basically allows you to pay your builder, your subcontractors, the manufacturer, etc. along the way before the final home closing is performed. Did you know the driver upon delivery of your modular home expects payment for the delivered modules? It would be an issue if there were no means to pay him. As work is completed, each vendor will expect payment, and a construction loan makes this easy while the building process proceeds.

Overall, because costs are more secure with modular homes, there are usually less surprises at closing that might otherwise occur with site-built home construction. Likewise, since modular homes are a better investment overall, the chance an appraisal will come in less than the amount financed is also uncommon. Modular homes actually give you the best ability to stay within your budget.

house closing costs

Buying your first home? Not sure what the difference is between a variable rate and a fixed rate mortgage? Do you understand the true cost of borrowing? Keep reading for 7 invaluable mortgage tips that are critical for any first time home buyer.

1. The bigger the down payment, the better.

The lower your down payment, the more you’re going to pay on a monthly basis. With a 5 percent down payment, for example, you’ll be expected to pay for mortgage insurance and will most likely be subject to higher interest rates. Most lenders like to see a down payment of at least 10-20 percent.

If there is any way you can squeeze that 20 percent down payment during the purchase process, you can literally save yourself tens of thousands of dollars over the life of the loan.

2. Good credit will save you money.

Lenders base your interest rate and your subsequent cost of borrowing heavily on your credit rating. If your credit is poor, you may be advised to wait a few years while you build your credit back up. The amount you save with a lower interest rate after rebuilding your credit could be tens of thousands of dollars over the life of the loan.

3. Remember the house closing costs.

Every mortgage has hidden costs associated with it, from legal fees to home inspections to bank’s house closing costs. Before you commit to any mortgage, remember to ask about all the house closing costs. You don’t want a $5000 surprise on closing day.

4. Get pre-approved.

While pre-approval can sometimes be more difficult, you can also save yourself a lot of unnecessary headaches. Essentially, you apply to the bank for a potential mortgage up to a certain amount. From there, you have a clear idea of your budget as you search for houses, and you can consequently make an offer that won’t be dependent on potential financing.

Additionally, when a home seller knows that you are already pre-approved to borrow for the amount of their home, this lets him or her know that you are a more serious buyer and could gain you a few concessions during the negotiating.

5. Investigate FHA loans.

The Federal Housing Administration (FHA) offers free loan insurance to qualified buyers with a minimum 3 percent down payment. This insurance means you can get a better rate from lenders without having to pay for outside mortgage insurance. Typically, the FHA sets maximum limits that depend on your county and region, but are based on the median house price for that area.

6. Budget for home insurance and property taxes.

No lender will mortgage a home that has tax liens on it or isn’t properly insured. When laying out your home ownership budget, always remember to calculate the monthly cost for county property taxes and home insurance. Whether the lender collects amounts from you monthly to cover these fees or you pay them directly each year, these are inescapable expenses that must be accounted for in your budget.

7. Choose a reputable lender.

Don’t just accept the first mortgage offer you receive. Instead, look for a lender that’s stable, reputable and able to offer you quality customer service. A lending institution is one you will likely be dealing with for 30 years, so finding one with a stable history and good reputation should be a high priority.

house closing costs

I have to hand it to the Big 800 Pound Gorilla (aka BOFA) for making it seem as if they reinvented the wheel with their No Closing Cost Refinances. The Gorilla has a mighty big Public Relations and marketing budget, because they had every newspaper in town acting like they had come out with something new. Truth is, no closing cost refinances have been done by savvy Lenders for years. It is possible to get better advice, service, and price from the right Mortgage Broker or Banker than you will from the Gorilla – and still not pay house closing costs.

A majority of the public is under the impression that you can get a better deal by going straight to a Bank, than by dealing with a Mortgage Broker or Banker. The reality is that it completely depends on the person you are dealing with. If you have the right Mortgage Broker you can get an excellent deal….even a better deal from the same bank! How could you possibly get a better deal even though you are dealing with a “Middle Man”?? Let me explain….

Until recently the Gorilla, like most every other bank, or mortgage company had two divisions that you can get a mortgage from. One division is their Retail side, which is who you work with when you contact the Bank Directly. The other side is their Wholesale division, which can do as much as 3 times the amount of business as the Retail division, with tremendously less overhead. Think about it – the Retail division has to pay for lots of prime commercial office space, national advertising campaigns, public relations – huge money to keep in the public eye – a huge expense per loan. The Wholesale division, on the other hand only has to let a very small target market know about their services – Mortgage Brokers and Bankers. They can have one office that covers several states or the whole country, so their cost to make loans wholesale vs. retail is substantially less! This is how you can go to a broker and get a better deal than going straight to the Gorilla – but you better make sure you got the RIGHT broker. You know as well as I do, the wrong person (even at the right bank!) can lead you down that frustrating road to pulling your hair out and not getting what you signed up for!

Back for a moment to the issue of no house closing costs. How is this possible? Most of the time people pay house closing costs when they get a mortgage right? Most of the time they do indeed, there are costs that must be paid in order to have a new mortgage close. Appraisals, State Taxes, Title Insurance, etc. Many borrowers do not realize they have a choice in this matter. Most lenders (whether their representatives are aware of it or not) can deliver a no closing cost refinance to a quality borrower. When lenders and banks deliver a long term loan to a borrower and the rate is fixed, the lender earns money depending on what rate is delivered to the borrower at closing.

Lenders and banks typically have the option to raise the interest rate charged in order to receive higher compensation from the end investor in the loan – this money can be used to pay the house closing costs on the borrowers behalf. In Florida, on a typical loan, you could probably accept about .5% higher in your interest rate for the option of having the lender pay all of your house closing costs (even less in other states). This is an excellent strategy for people who do not plan on staying in a property for a long period of time. The other time that it can be good to take advantage of this is when interest rates are declining. If rates decline and you have not paid house closing costs, then there is no reason not to refinance again for no costs (assuming you have no pre-payment penalty). People have done this multiple times over a period of months or years under the right circumstances. Amazingly, not all lenders or mortgage professionals are aware of how to do this.

We have a shoppers guide to selecting the right Mortgage Professional that every consumer should have in their hands before shopping for a loan. Most people make some crucial mistakes in the process that they could well avoid with this information.

house closing costs

First-time home buyers are sometimes surprised by the many house closing costs. A good Realtor will inform their client that they will pay about 2.5 percent of the price of the home for house closing costs. This amount may be as high as 3 percent or more in some circumstances.

Loan applicants must ask the lender for a Good Faith Estimate (GFE). Responsible lenders normally give you a GFE at the time of application. Regulations oblige lenders to disclose estimated house closing costs and the Annual Percentage Rate within three days of the application. Loan contingencies vary and sometimes small changes will occur after the initial application.

Closing Costs Determined on Your Chosen Financing Option

Lenders propose several options for fees. One option is a “No Cost” loan. These loans are offered at a higher interest rate than traditional loans; basically your house closing costs are included in your loan by the higher rate. Another option long-term buyers prefer is buying your interest rate down through points. Buying a point is one percent of the cost of the loan and typically equals a .125 lower interest rate. Decide your priority. First-time buyers are usually concerned about beginning costs.

Typical Closing Costs Checklist

Generally, a lender will charge an origination fee that can be one percent of your loan amounts as well as a processing fee. Processing fees begin at $350 and go up from there. If you are working with a mortgage broker, there may be bank closing fees too, including an underwriting fee and a doc preparation fee. These fees will generally total between $600 and $900. There are also title fees, title insurance fees, inspection fees and an appraisal fee. Title fees will vary depending on loan amount. Appraisal fees can cost approximately $350 or more. Since all of these fees can vary so much, the GFE is crucial.

Payments for Taxes, Prepaid Interest and Insurance are Deposited in Escrow

To procure financing for your new home, you are required to buy homeowner’s insurance. The first year’s premium will be paid at closing. The lender may require one or two months’ interest at closing as well, since you have about a month of grace before your first mortgage payment is due. The later in the month you close on your home, the less interest you pay at closing. Depending upon the time of year you purchase and what property taxes have already been paid for the year, they will also collect four to nine months of property tax at closing.

Again, in order to prepare for house closing costs, smart buyers refer to their Good Faith Estimate.

house closing costs

Many first-time home buyers do not know what to expect at a house closing. You should know that you are going to need more cash than just your down payment. When you submit your application for you loan, your lending institution will give you a Good Faith Estimate which will inform you fairly closely what the house closing costs will be and you can prepare accordingly.

A good way to be prepared for the house closing is to ask for a good faith estimate (GFE) once your application is in. By law, lenders have to tell you what they estimate house closing costs will be, as well as your annual percentage rate (APR) within three days of your applications submission. Subsequent negotiations and adjustments will probably alter the cost slightly after the first application, but you still have a right to know how much it will cost.

First Time Home Buyers May Have Fewer Choices

Most lenders have at least a couple of different options for fee payment. Some institutions offer a “no cost” loan that allows you to purchase a home with little or no out-of-pocket cost, which is attractive to first-time buyers. Be warned that you will have a higher interest rate than the average mortgage borrower. You also have the option to put more money down through buying points and therefore lower your interest rate. Shopping around for the best rate is ideal if you have the leisure time and resources, but many first-time home buyers are more concerned with coming up with house closing costs. Discussing options in detail with your lender will provide you with the most valuable information.

Educate Yourself in the Purchase Process

Lenders may charge a one percent origination fee in addition to a processing fee. This processing fee can range from a few hundred to thousands of dollars. If you are using a mortgage broker, there will also be bank fees. Some of these bank fees include items like an underwriting fee or a “doc prep” fee, and usually runs between $600 and $995. When your lender gives you a GFE, it will have title fees and appraisal costs itemized as well. These fees will vary directly depending on the loan amount, and are usually between $1,000 and $2,000. An appraisal fee starts at $350. With the number of varying factors at play when purchasing a home, getting a GFE from your loan officer is essential to the process.

Tax, Prepaid Interest and Insurance Payments are Placed into an Escrow Account

Financing fees are only one part of the house closing costs. To make sure you get funding for your home purchase, you must have proof of insurance as well as one year’s worth of insurance premiums. In this way you will have secured your investment along with the banks. Tax on your new home and any prorated interest will be tacked onto the house closing costs.

Just to repeat, make sure that you are on top of all the house closing costs, so that there won’t be any embarrassing surprises at your house closing.

house closing costs

There are many factors that go into home building costs and it can be huge task to even come out with an estimate.

The quickest way to estimate home building costs is to find similar houses in the area that has the same overall look and size of one that you want to build. Then take the selling price, minus the cost of the land and you will have a rough and quick estimate of the construction cost. This is, of course not an exact science, but by following this basic rule you will be able to get a rough estimate.

If the house that you are comparing with was built a few years ago, then you should factor in the appreciation cost due to increase in the cost of labor and materials at between 2 to 5% per annum.

Home building costs can be further influence by the interior feature of the home. Let’s say you want a completely furnished basement and the house than you are using as a reference does not. You should factor this into the cost estimate. A little here and there can add up to thousands of dollars.

Another way is to seek the help of a construction company. If you show them the type of house that you are interested in they should be able to respond to you with a quick estimate. Usually, due to expertise and experience, their estimate can be quite close to the actual building cost.

What if the house that you plan to build is different from what is available in your vicinity? Here is a tip. Go online and type in the terms ‘home plans’ or ‘house plans’. You will find many sites that offer thousands of house plans. You can search by type, size, number of rooms etc and for a small price you can download the blueprint. Then ask your friendly construction company to give you an estimate.

Yet another way is to use home building kits. Again go online and type in ‘home building kits’. There are many companies offering home building kits than contains everything (except labor) that you need to build a house. Then ask your construction company to quote for labor charges. Labor charges constitute a significant portion of the cost of building your own home and if you have the expertise, using a home building kit and building it yourself can reduce your estimate significantly.

No matter how precise or detail oriented you are in the planning stages, you must keep in that there may be an unexpected cost overrun. It is a safe practice to put away about 10 or even 15 % for contingency to ensure that you have the money to cover any overrun.

Home building costs can often times be very difficult to pinpoint. But if you use some of the methods described above, and by being precise and detail oriented, you will be able to come up with a very close estimate on your home building costs.

house closing costs

The question many of us are asking these days is whether to refinance our mortgage, or wait for better terms or a better rate. While no one can accurately forecast where rates are headed, there are some steps you can take that will help you decide whether to refinance your mortgage now:

First: How much lower are the rates than what you are paying on your existing mortgage? Keeping in mind, especially if you are writing off some mortgage interest on your taxes, that a slight drop in rates may not make it worthwhile to refinance.

Second: If the rate is significantly lower, you may want to check what your monthly savings will be. When doing this, make sure you calculate the new mortgage payment after your refinance without factoring in any years you are adding on to the end. For example, if you owe 27 more years on your current mortgage, calculate your new payment using the new rate and the amount you are refinancing only over 27 years. Otherwise you might think you are lowering your payment more than you actually are, when you are really just adding years onto the end.

Third: So now you know how much you’d save each month on a refinance, but how much are the house closing costs going to be for your refinance? You need to be sure that paying any house closing costs (including points) are worthwhile. Here’s some simple math: If you are paying $2500 in house closing costs, and the reduced rate saves you $500 each year, you’ll need to stay where you are for five years to reap the benefits. For many, house closing costs are worthwhile, but for others who know they will need to upgrade, or have a job situation that can mean having to move, house closing costs may eliminate any benefit of the refinanced mortgage.

Fourth: If you’ve arrived here, you have probably figured that you are saving enough over time to make your new rate and the house closing costs worth moving forward. One last consideration: Do you think you will refinance again? This one may be close to impossible to answer easily, because who knows where rates are going. But, if you think they might go down, make sure you know what your lender’s terms are as far as refinancing. Some lenders will not refinance a mortgage for 90 days after the close of the one you are doing now. Make sure you are getting enough savings to not worry about that.

Fifth, and finally: One last word of caution: Once you lock you may have to pay fees (e.g. for an appraisal) that might not be recoverable if the loan does not go through. One of the biggest issues you could run into is that your appraisal is not high enough to qualify you for the mortgage. You may want to carefully look at comparable sales in your neighborhood, or, even better, talk to someone who is aware of the real estate market in your area, to be sure that your home will be appraised at a high enough value to meet the criteria of your loan.

If you’ve made it this far, you may be inclined to go forward and refinance. Best of luck! Information in this article should not take the place of a conversation with a finance and possible tax professional who is aware of your unique situation.

house closing costs