Be­ing a buyer and un­der­stand­ing clos­ing costs

Sun Sentinel Broward Edition - Homespot - Broward East - - REAL ESTATE Q&A - By Sa­man­tha ( Sam) DeBianch

Clos­ing costs

are some­thing that many home­buy­ers get con­fused about. Who pays what and where do the costs come from? Here’s what to re­mem­ber be­fore clos­ing the deal. What are the costs? Clos­ing costs can in­clude but are not lim­ited to the fol­low­ing: Ti­tle insurance, ti­tle searches, flood cer­ti­fi­ca­tion fee, record­ing the trans­ac­tion in the city or county’s records, sur­veys, ap­praisals, un­der­writ­ing the mort­gage, pulling a credit re­port, le­gal fees, and pro­cess­ing fees. Who pays for the costs? Buy­ers gen­er­ally pay for the ma­jor­ity of clos­ing costs, as the costs usu­ally stem from ob­tain­ing a loan. With that said, be­ware of any mort­gage lenders stat­ing they will cover your clos­ing costs; while you may not have clos­ing costs, you will have ad­di­tional fees built into your mort­gage.

A use­ful tip that some buy­ers I have worked with use rolling your clos­ing costs into your mort­gage. For ex­am­ple, a pur­chase price is $500,000. Your of­fer is $500,000 with $10,000 credited to­wards your clos­ing costs (which means you are pay­ing $490,000 and ask­ing for a $10,000 credit for clos­ing costs). While this is a great op­por­tu­nity to com­bine costs un­der your mort­gage, you also must make sure that the prop­erty ap­praises ap­pro­pri­ately so that you are able to make it work. Another piece of ad­vice: When ne­go­ti­at­ing dur­ing the real es­tate trans­ac­tion, it will make more sense for you to ne­go­ti­ate a price re­duc­tion (or re­ceiv­ing a credit for) clos­ing costs ver­sus ask­ing for a price re­duc­tion (which would only lower your monthly pay­ment min­i­mally).

How do you know what your clos­ing costs will be?

While there is no magic num­ber for what clos­ing costs are, they gen­er­ally range from 2 to 5 per­cent (more or less). Af­ter you ap­ply for a mort­gage, the lender, by law, must pro­vide you with a Good Faith Es­ti­mate (GFE) that sum­ma­rizes your loan and states all of the set­tle­ment charges so that you are fully aware of Use­ful tip:

al­ways pre­pare to pay the higher range of costs that are pro­vided on your GFE so that the only thing you are left sur­prised about is a bot­tle of cham­pagne in your re­frig­er­a­tor left by your Re­al­tor wel­com­ing you into your new home.

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