What are buyer closing costs?
Another term I didn’t know before beginning our home search was “closing costs.” Closing costs means more money that you have to scrounge up to buy a home on top of the down payment. This term will come up when you are looking for a loan or making an offer on a home. There are several decisions you can make regarding how you pay your closing costs.
What is included in buyer closing costs?
There are several different fees and charges that make up buyer closing costs. The fees will all be listed on your Buyers/Borrowers Closing Statement, and you can ask any remaining questions during closing. From experience, the closing meeting is kind of a whirlwind because there are so many documents to sign and discuss, so we went through it line by line with our buyer’s agent before the meeting.
- New loan charges
- Appraisal Fees
- Credit Report Fee
- Interest on loan
- Home Owner’s insurance (1 year up front)
- Property Taxes (1 year up front)
- Closing Fee to Title Company
- Title Charges (owner and lenders policy)
- Water Transfer Fees
Our exclusive buyer’s agent was able to give us a rough estimate of the closing costs before we made an offer on the home. That way, we could budget appropriately.
Most of these fees and charges cannot be reduced, but, you can shop around for home insurance and this can make a big difference in you closing costs.
When are buyer closing costs paid?
Buyer closings costs are paid at the closing meeting. They will be included as a lump sum along with your down payment.
There are two different ways to pay your closing costs.
You can pay your own closing costs, or you can ask the seller to pay them. You will make this decision when you make an offer on a home.
If you ask the seller to pay closing costs it generally increases the sale price of the home by the same amount. For example, you could offer $210,000 on a home and pay your own closing costs of approximately $5,000. Or, you can offer $215,000 on the same home, and ask the seller to pay your closing costs.
There are pros and cons to both options.
Seller Pays: The up side to this is that you will not have to have the cash for the closing costs at your closing meeting. The down side is, generally you make a higher offer on the home, and then the seller pays closing costs. This means that basically you will be paying interest on your closing costs.
Buyer Pays: The up side to this option is that if you pay the closing costs yourself in “cash”, you will not pay interest on closing costs. The down side is, you will need to budget for these costs along with costs to move, any repairs that need to be made to the home before moving in, and down payment.
We discussed the ins and outs of our situation with our agent to decide the best course of action for us. In the end, we decided that we would look for homes in a price range that we could pay our own closing costs.
To find out more information about closing costs, get connected with one of our exclusive buyer’s agents.
If you were given a choice of where you wanted to live, taking out relocation for job or family situations, where would it be? In the State of Colorado, there are numerous areas, all different in some way or another. You could live on the Eastern Plains, the Front Range, the Grand Mesa area, the Northern area and even Metropolitan Denver. Just to name a few. Within all of these areas are even more choices.
To get started you’ll want to list out the things that are important to you in a neighborhood. Do you have children? You certainly don’t want a retirement community. A good school district would be high on the list, as are families in the neighborhood, parks, recreational centers and pools. Are you a runner? If so, sidewalks and trails throughout the neighborhood, away from busy streets or main thoroughfares would be up there. Do you like to shopping or nightlife? Rural or out of the way areas may not be for you. You probably want a home that is within minutes of shops or entertainment districts.
Colorado has so many wonderful choices. On a recent road trip, I saw a sign in Flagler that said “Free Land”. Flagler is 120 miles east of Denver. Curious, I looked up the website for the town of Flager http://www.flaglercolorado.com and found their link for “Free Land Incentive”. Sure enough they are giving away land. Flagler is giving land to companies that are willing to locate there and offer employment. The size of the lot the Business or industry will be given will depend upon the number of jobs they create.
The list can quickly grow and be added to constantly. Just be careful that you don’t box yourself in so much that you can never find something to suit your needs. List out the top requirements first and then the “would be nice to have”s. Then when you find “the one” you’ll know what you can’t live without and what you can.
Once you’ve determined where you want to live, contact an Exclusive Buyer’s Agent. These professionals can then assist you in your search. They have the experience and knowledge that will guide you in making an informed choice.
Julie
I am a home owner in Colorado, and I love it! I cannot explain how it felt to walk up to our front door for the first time as the owner, and unlock the door. And then get all of the locks rekeyed. First home improvement and I can’t explain it, but somehow it was fun to write that check. Sigh. I love our new house, on our new street, in beautiful Colorado.
Before I go off about the wonders of being a home owner, let’s talk about closing. What is closing anyway?
Who was there?
The seller and her agent
The buyers and our agent
Representative of the Title Company
What is the process like?
The process takes about an hour and a half and went something like this: the representative from the Title Company sat at the head of the table with a large, and I mean LARGE stack of legal documents. She would briefly explain one document and begin passing copies around the table. Many of the documents needed original signatures from all parties. So unless you’re famous and people want your autograph, you’ll probably never sign so many papers at once.
As each document got passed around, our agent would tactfully re-explain to us what the important parts of the document were. It’s not that I didn’t understand or trust that the Title Company was being honest with us; it’s just that I trust our agent will protect us by explaining the important points and why they are important from our perspective.
The seller’s agent also explained the documents to the seller, and what was important from her perspective.
What kinds of documents do we sign?
Now remember, there was a large, and I mean LARGE stack of documents. I don’t remember them all. Not only that, I don’t want to remember them all. But, here are some examples:
- Loan documents
- Warranty Deeds
- Information about your Escrow accounts
- Final Closing Statement
- Settlement Statements
Basically, we signed how much we are paying; that we understand how much we are paying, who we are paying and where the money is coming from , who we are working with and exactly what we are buying and that we understand what we are buying.
What is closing? It’s when everyone finally gets what they wanted from the transaction.
At the end, we signed over the cashier’s check to the title company (after all that trouble with the wire, I just went with the cashier’s check) and the seller handed us the keys to our new home.
Everyone left smiling. We are home owners, with keys in our hand. The seller has a new future, with money in her pocket, or account. The agents finally will get paid. Everybody wins.
This is one of those things where I always thought that by the time I buy a house I’m going to be this incredibly responsible super person that never pays late fees or does things at the last minute.
Unfortunately, I have not yet transformed into that person.
Today I had the seemingly simple task of “getting the things together that we need at closing.” Sounds easy enough, right? But, from experience, I know that things that seem easy can have a whole bunch of problems, so I decided to get started as soon as I got the final numbers from our agent. That was this morning.
Here are the things you need at closing:
1) ID, like driver’s license
2) Balance Due From Buyer/Borrower
3) Bottle of Champagne (or is that only in the movies?)
Here’s the skinny on your options: You can either pay your balance due (meaning your down payment and your closing costs) by wiring the money or with a cashier’s check.
If you are wiring the money, the Title Company advises that you wire it the night before you close. That way, it will be in their account by the time you close.
Sometimes Customer Service is like a Magic 8 Ball, I ask the same question and get a new answer.
So, I decided to wire the money. My advice to you is, don’t listen to your banker if they tell you that it can easily be done online, at home. If it can be done online, it is certainly not easy. I passed through the hurdles of getting passwords emailed and texted, verifying my identity and having my retina scanned (just kidding), only to be shut down at the last step. “Daily wire transfer limit exceeded.”
If you ask three different bank employees “what is the maximum wire transfer I can make online?” you will get three very different answers. Ironically, if you point this out to each of them, you will get the same answer every time.
Bottom line is, I’m in the middle of changing my name so I don’t technically have a valid ID. I never got the online wire transfer to work, even though I did speak to three different bank employees and a manager. This is when the mission impossible music starts kicking in.
My advice to you is, don’t try to change your name at the same time you are trying to buy a house. You might end up having to go to the DMV, the bank and the closing meeting all in one day. Who would be crazy enough to do that??
First of all, “Phat” is pronounced fat and is slang for highly attractive. And the answer is, “maybe”. It’s tough trying to sell your home in a buyer’s market. In today’s market you need to know quite a bit more than in previous years.
Webster’s Dictionary states that “value” is: 1 : a fair return or equivalent in goods, services, or money for something exchanged; 2 : the monetary worth of something : market price… Okay, what is “market price”? Again, according to Webster: It’s a price actually given in current market dealings.
In order to price your home “attractively” you need to know the local market. Prices vary depending upon the State the home is located in. Then it depends on the City. And even then, where in the City it’s located. Some neighborhoods offer more amenities, closer to public transportation, better schools, more parks, the list goes on and on. There is a difference between Northwest Denver and Southwest Denver in Colorado. There could even be variances between neighborhoods less than 5 miles apart.
Other considerations are upgrades to the home. A house may sell in a neighborhood for more than similar houses because of a new addition, remodeled kitchen or move-in readiness. The less personalized a home is the more pleasing it is to the buyer. It may not sell for more, but it’ll sell quicker.
Talk to a real estate professional and a professional appraiser. They will know the “comps” (recent sales of nearby homes that are similar, or comparable, to the home that’s the subject of the appraisal). If the appraiser cannot locate three comps within your area, you may need to get a second appraisal. This can validate the first appraisal and make a lender more comfortable.
Of course, if you’re a buyer in the market for a new (new to you) home, talk to an Exclusive Buyer’s Agent. These professionals will represent only the buyer in a transaction. They’re very knowledgeable about the value of a home and what to look for.
Julie
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