Closing costs are in style

| Wednesday, December 8th, 2010 | No Comments »

Let’s face it, there are a lot of costs in real estate. From your earnest money to your down payment to your closing costs, it’s all about money.  Let’s get down to the nitty gritty of the ever popular closing costs.

I feel like this is where I need the voice over from a pharmaceutical commercial that excludes me from any liability (Cara Erdman is not a practicing loan officer. Please consult a mortgage professional before taking her advice. If her comments cause a headache lasting more than 4 hours, please see your physician.) Ok back to closing costs which are a combination of costs associated with your loan. They include (but are not limited to) title insurance, escrow fees, recording fees, loan origination fees, appraisal fees, interest, taxes and insurance. Closing costs also depend on the purchase price and the type of loan and there is no exact science. For example, you cannot say that closing costs are an exact percentage of the purchase price but your loan officer will be able to give you an estimated idea of what they will be. And I do know this; they are usually more than you think.

Closing costs vary but on recent transactions I’ve seen closing costs in the $6000 to $10,000 range. Because these are costs associated with the buyer, it is up to the buyer to bring a check for this amount at the time of signing. However, most buyers don’t have such a large chunk of change laying around, especially as they are getting ready to cough up the down payment so here is another solution that seems to be very in style. The buyer can ask the seller to pay for the closing costs. It is done up front when the offer is written and it is something the seller can agree to, modify or refuse. Also, a buyer doesn’t have to ask for the full amount; maybe only half or a portion of the closing costs. In the end, this reduces the amount of money the buyer has to pay out of pocket, thus freeing up cash for other important items that lie ahead (like mortgage payments on their new home or taking their agent out to dinner.)

If this has only created more confusion, please let me know. Or if you have a story to share about your experience with closing costs, please leave a comment. And if you are curious what my favorite restaurants are, I’d be happy to share!

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