Tips for Home Buyers - Closing Information
Excitement and anticipation course through an individual during the celebratory closing day. Up to this point countless efforts have been expended and naturally one can feel the need to let off the gas a bit. All of the back and forth between the lender, seller, and you as the buyer led to a satisfactory deal for all parties. And now, finally everyone seems to be happy and in agreement that the sale can move forward. But it’s important to remember this is still a critical piece in the buying process and requires one’s undivided attention to bring the purchase to completion. Patience and focus is a necessity but the benefits of a smooth transition into your dream home will make it all worth it! Keep reading for pertinent information that will help simplify the overall process for you.
Closing costs are paid to third parties and usually are between 2% and 7% of the purchase price for the home. Both the seller (1% to 3%) and buyer (3% to 4%) contribute to paying these, and most are taken care of before the keys are placed in your hand. But a few such as an inspection fee or other various costs may have already been paid when the home was officially sold. As most of the costs are related to the mortgage, the buyer will shoulder the majority of this load. If you are fortunate enough to pay cash there will still be closing costs attributed, but they will be significantly less. Some examples of fees that may come up for the buyer are: loan origination, running your credit report, underwriting, home appraisal, title search, home inspection, survey fee, and taxes. For seller’s examples are: taxes, attorney and closing fee, and transferring the title. They also must cover all real estate agents’ commissions (4% to 7% of the home’s sales price).
Each state may have additional fees, and your real estate agent can explain them to you in more detail. The reason behind this is states have differing legal requirements when it comes to selling a home. For example, Texas has the most closing costs nationally and Nevada has the lowest. Some advice for reducing closing costs is: look for a loyalty program with a bank, close at the end of the month, get the seller to pay, wrap the closing costs into the loan, and join the army or a union. Because of the high price of purchasing a home, it’s worthwhile to explore any and all financial breaks available to you. Although not all of these may be feasible for some people, being aware of their potential to reduce costs is worth noting.
The most accurate closing cost estimate will come from your real estate agent, lender, or mortgage broker but you can get a general idea by using any number of online closing costs calculators. By law the lender must send the buyer a closing disclosure that breaks down the costs one more time at least three days prior to closing. Sellers will receive a copy as well from their real estate agent. Before signing anything the day of closing, review these documents to ensure all the numbers match your original quote.
Before you show up, find out what you need to bring and make a checklist. Generally you’ll need an ID, cashiers or certified check to cover closing costs, proof of insurance, and any other requested documentation. You may also need to wire down payment funds ahead of time. Once you sit down with the necessary parties to review all the paperwork make sure to read it carefully before you sign. Most people want to peruse and get to the finish line quickly, but this step is worth taking your time on. Once all the documents are signed off you will be handed those precious keys and are free to enter your new residence. This would be an acceptable time to exhale a sigh of relief as all that hard work has paid off!
We are more than happy to answer questions you may have after reviewing this information. We have some amazing programs available for all home buyers. Contact us today and allow our team to help guide you to the answer you seek.