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Tuesday, March 26, 2013

Buyer's Closing Costs - What Does it Cost to Close Escrow?

By Elizabeth Weintraub, Guide

Buying a home involves more out-of-pocket than just the down payment. There are also closing costs to pay for items such as title policies, recording fees, inspections, courier charges, reserves to set up an impound account and fees that a lender charges. It is the fees a lender charges to make a loan that typically cost the most.

Closing costs are on top of the purchase price.

How Much Are Closing Costs?

As a rule of thumb, closing costs to buy a home run about 2 to 4 percent of the purchase price. Much depends on the points and origination fees a lender charges to make the loan, which are disclosed on the buyer’s Good Faith Estimate.

The total closing costs to purchase a $300,000 home could cost anywhere from approximately $3,000 to $12,000 or more.

Non-Recurring Closing Costs

Fees 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
· Home Inspection
· Lender fees paid in conjunction with the loan on the HUD-1, line 800.

Recurring Closings Costs - The Prepaids

Recurring 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
· Mutual or Private Mortgage Insurance Premiums
· Prepaid Interest

The time of the year that you close will dictate how many prorata months of premiums the lender will collect to hold against future payments of taxes and insurance. Not every loan has an impound or escrow account, but typically loans totaling more than 80% of your purchase price will require an impound / escrow account.

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.

· If you are financing 100% of the purchase price, the lender might limit your credit to 3% of the purchase price.
· Depending on your FICO score and the amount of your down payment, the lender might allow a seller to credit you as much as 6% of the purchase price. 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.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Gerharter Realtors is embracing these new mediums of communication to better serve our customers. We have created our e-family to better place important information in your hands to help you with your housing needs. As a part of Gerharter Enterprises we have access to a broader range of additional services and resources to better assist you. Visit me at my Web Site, Blog, Facebook, Twitter, You Tube or Pinterest. Please check out our helpful resources on Sellers Tips, Buyers Tips, Foreclosure Tips, and Mortgage Tips. For a personal consultation please visit our Office.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

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