What are the standard closing costs for a purchase of a home?
In residential mortgages, the total cost to close is generally between 3 and 6% of the borrowed amount. You will be asked to bring certified checks or money orders to the closing. Your real estate attorney will advise you as to the exact dollar amount with as much advance notice as possible. Before then, you will be given a Good Faith Estimate (GFE) which outlines the costs in a line-by-line breakdown. To offset these costs, ask your attorney about a Seller's Concession which we will detail below.
What are the standard closing costs for a refinance of a home?
In residential mortgages, the total cost to close is between 3 and 6%, but are usually included in the refinance. Unlike a purchase, you do not need to come to the closing with checks or money orders in hand. Instead, all the necessary funds come out of the loan and are disbursed as necessary. For example, if you are paying a Capital One credit card off (you don't have to close the account), the check will be issued by the closing attorney to Capital One when the loan funds are wired into his or her account.
BE AWARE.
Many times clients come to us after being lied to. That's the simple, most direct way to put it. There are fees incurred by any loan that are standard! For example, Title Insurance is a set amount and cannot be changed by anyone. Mortgage Tax is another amount that is simply unchangeable. We see many Good Faith Estimates (GFE's) that are simply wrong on these and other fees. In order to get your business, there are brokers (and lenders) that will lie. There are some people in every business that do this to undercut the competition, but you end up losing in the end. (Are you thinking about a car salesperson you recently encountered? Not all of them are bad...)
What happens when the GFE is significantly incorrect? You don't get the cash you expected from the refinance. You don't have enough money for the closing on the purchase of your new house. These are not examples of good surprises. We wish NO ONE has this experience. But some do.
BE AWARE. You should always ask the questions you have right up front. If you are not satisfied, or you feel uneasy, walk away. If the company asks for a non-refundable application fee, you may want to think again.
There can be, however, legitimate up-front costs. For example, when the appraisal is ordered, you will be asked for the fee "at the door". At My 123 Mortgage.com, we ask for no money up front except to pay the appraiser directly when they come to perform their task. This ensures that we have an accurate, unbiased assessent of what the house is worth in the lender's eyes.Many people think that a realtor evaluation is an accurate appraisal value. This is not always the case. Although many realtors are accurate, an appraisal is required, and it may or may not match you or your realtor's assessment of value.
What is a Seller's Concession?. Buyers have the option of negotiating a percentage of the purchase price that the sellers grant in order to sell the home to you. Sounds outlandish? Most homes on the market are not there to sit around and wait. If the right buyer comes along (pre-qualified, good faith deposit in hand, commitment to close within an acceptable time period), your attorney can negotiate a seller's concession.
WITH A SELLER'S CONCESSION,
UP TO 6% OF THE PURCHASE PRICE IS GRANTED BY THE SELLER
TO COVER THE BUYER'S CLOSING COSTS!
And there are many sellers who do it. Most of it is motivation and acceleration.
Using Seller's Concessions, you can buy a house with zero money down AND come to the table with no money for closing costs!
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