Closing Costs, Etc.?

Question

I have just been approved for a First Time Homebuyers Purchase Loan for the amount of $125,000. in Southern New Jersey (this may not seem to be much but, I do not earn a great deal, and am single, with no real responsibilities). I am looking to purchase a 2-3 bedroom, 1+ bathroom Townhouse, with a family room.

Anyhow, I have 100% financing, and am planning to ask for a Seller's Concession for pay for Closing Costs.

What are some expected out-of-pocket fees that I may have to pay at settlement. And, if there are any, what is a TOTAL sum of an Estimated amount that I should have on hand for these expenses.

I am hoping that the amount of money I am required to pay will not be a great deal, and I will be able to pay them from my Paycheck. In addition, I do have at least $2800. set aside.

Thanks.

PS: I do have a Realtor. However, I wanted to get others' advice, in order to compare "truths."

TO: ogrendle - It is always good to get others opinions. Althougth I do trust my agent, I want to KNOW that I am headed in the right direction. Remember, I am a First Time Homebuyer.

Answer 1

In your offer, you should ask the seller to pay all your recurring and non recurring closings costs (meaning all up front fees including taxes, this does not mean they will be paying the taxes etc later when you own it) up to $6,000 for example. Cap it so they feel comfortable with it. Also request specific inspections and request the seller pay for these as well and in addition any recommended repairs from those inspections up to $1,500. Also specify for the seller to pay for the escrow and title fees. The only thing you should have to come in with is your earnest money deposit of probably $1,000 and your appraisal fee of probably $350 if the seller accepts these terms.

Answer 2

A good rule of thumb in California is that closing costs are about 1.25% - 1.5% of the purchase price of the home. You'll have fees to the lender, title insurance and escrow fees, prorated property taxes and other prorated fees (things that the seller paid for up front and you're reimbursing him since he won't live there now), things like that. You'll want to ask your Realtor what's customary in NJ so that you know how much to ask from the seller. You don't want to ask too little, and if you ask way too much they'll probably say no way!

Also, when you get preapproved for the loan the lender should give you a Good Faith Estimate of the costs. If you're approved for $130,000 find out what the costs would be for that amount. That's your worst case scenario - if you buy a place that's only $120,000 you can count on it being less than that.

Good luck!

Answer 3

First get a good faith estimate from your lender. This will give you a good idea of what fees and costs will be associated with the mortgage.

Second contact the settlement company and get their fees as well as taxes, transfer fees, title insurance, etc. These will be more accurate figures than those provided by the mortgage company. The mortgage company only "guestimates" on these fees. Compare these with the fees given to you by the mortgage company.

Third call your insurance company and get an estimate. Normally they will collect 1 year of insurance at closing and another 2-4 months worth for an escrow account. Also don't forget that they usually escrow several months of tax payments as well.

Then check with your Realtor about those fees that are not included as part of the closing costs, the "paid outside of closing" or POC. This often includes the credit report, appraisal, home inspection and other inspections. Sometimes the mortgage company will allow you to pay for the credit report and appraisal at closing but often they require it to be paid before.

Lastly, check with your mortgage company about any restrictions on seller contributions. Certain types of loans have a limit on how much the seller can contribute and also what can be paid for by the seller.

Make sure when you are writing the offer to purchase and ask the seller for closing costs that you indicate the sellers contributions should be for closing costs, prepaids, points and other settlement expenses to be used at buyers discretion. Don't just put "closing costs".

Good Luck.

Answer 4

Seller concessions are a great way to get into a home with limited assets.

When you get 100% financing, generally the lender will allow up to a 3% (of the sales price) seller assist. However, with first time homebuyer loans, you can often go to 6%. YOUR AGENT PROBABLY WILL NOT KNOW THIS. Talk to your lender to verify the specific percentage allowed.

Also, the seller assist does not cover the tax and insurance escrows. As NJ has the highest real estate taxes in the country, you need to review the numbers with your lender to make sure they work.

Answer 5

I work for a company called Payment Choice Home Loans which is owned by former CEO of Champion Mortgage, Jim Goryeb. The average seller's concession max out is 6% of the total loan size. The average closing costs on this size loan would run betwee 6-9k depending on how many points aka prepaid interest you are being hit with. If you take the max out of 6% of 125k which would be 7500, and closing costs are on a low end of 6k, then you would actually walk away with a 1500 check, depending on what the sales contract says.

Answer 6

Expect closing costs to be about $2500. If the seller will agree to pay all closing cost (Which is unlikely) then you are fine. There will be none. My recommendation is finance the whole damn thing, including the closing cost. Rather than pay $125k for a home, simply set your target at 120k and leave yourself the 5k for closing cost. When you go to closing, they will finance everything.

Some people will recommend against it, saying why finance it etc. But reality is you won't live in the home for 30 years so what difference does it make?

Answer 7

about 3% of purchase price is safe to say. There are many lenders that try to add on junk fees to get paid more. since you are the buyer you should get a good realtor if you don't have one (it's free). A good realtor will look over the docs to make sure that the lender doesn't add junk fees. you can e-mail me if you have any questions. if the lender is charging more, and will not lower it, find a new lender. for the replys that say it's more got over charged by a lender or are a junk fee lender

Answer 8

If you get seller concessions, make sure it is at least 6%. You can average for every $100k for a home, you are looking at or around $3k in closing costs. The only thing you might have to pay out of pocket for is an Apprasial - around $350.

Couple Things To Think About!

~ Make sure you look at the HUD1 statement 24hours before you close. This way you know what you are being charge for in every area.
~Have an Attorney look at the documents/contracts before you sign them, DON'T take their word for it.
"If you don't have access to your rights, you don't have any!"
~Make sure that your DTI (debt to income ratio) is fine, you don't want to end up house poor. Meaning, more house and payment than you can handle.

Make sure you take a close look at the sites below, watch the online presentations to help you out.

Good Luck!

Answer 9

You'll have lender's fees. If you are using a mortgage broker, you'll have broker fees. If you are using a title company or a lawyer, you'll have their fees. You also have to pay state or county tax stamps, and fees for recording your deed and mortgage. You'll looking at a cost of about $5000, but that's a very rough estimate. Ask your bank or broker for a good faith estimate so you can have an idea.

Answer 10

what you have set aside should be good enough. i too got the seller to pay the closing costs. the more desperate the seller is the better chance you will have to get them to pay it, if the property has been for sale for awhile that will really help. i think you should be fine. congrats on your first home of your own. you should be proud, good luck

ps i bought my house in california (expensive) and $3000 was enough for me