Closing Costs - What to Expect

Many homebuyers are shocked at closing when they see the list of closing costs; major and minor fees associated with a home purchase.  There are many reasons these costs can be more than the lender estimated, maybe increased fees on lender-controlled aspects of a transaction, or possibly a buyer chose a third party (appraiser, inspector, attorney, title company) that might charge higher prices than those quoted by the lender.  New rules and regulations provide better clarity on these closing costs that buyers can expect to pay.  Most buyers should expect to pay from 3-5% of their loan amount in closing costs.  These costs are in addition to their down payment, and those already stretching to buy should know they'll  need to cover these costs in addition to savings reserves that some lenders require. 

There are several steps you can take to avoid closing cost surprises:

Ask seller to pay closing costs:
Many buyers, before making an offer on a home, will discuss negotiating with the seller to pay some or all of the closing costs.  This may include making a slightly higher offer in exchange for seller paying the costs.  This, in essence, is financing the closing costs within the mortgage loan.  Sellers eager to complete the sale may offer to pay some closing costs in order to expedite the transaction or price their home slightly higher in anticipation that they'll be aiding a buyer with these costs.

Understand the Good Faith Estimate:
Make sure you get, and carefully review, the Good Faith Estimate that your lender will provide for you within 3 days of your loan application.  This paperwork will describe all the closing costs you should expect.  This Good Faith Estimate is just that, an "estimate" and sometimes the costs associated in the estimate can change.  But in January of 2010 the government make it illegal for some of these costs to rise and capped other cost increases at the most 10%.  Costs that cannot increase include points (once the interest rate is locked in), loan origination fees and transfer taxes.  The costs that can increase by no more than 10% include services required by lender, title-related serves and government recording fees.  Other closing costs that can change the numbers are extra home inspections, title services not required by lenders, homeowner's insurance, and escrow deposits.

Get more than on Good Faith Estimate:
Lenders use the same forms in providing customers the closing cost estimates so it's possible to compare estimates and negotiate for lower fees.

Read your HUD Settlement Statement Closely:
Ask your lender to provide the HUD settlement statement at last a few days before closing to compare the closing costs with those on your Good Faith Estimates.  Definitely ask your lender if there are any inconsistancies or adjustments that you notice.

Documents and fees expected at closing:

Documents:
Bank note or mortgage
Transfer Documents
Hud-1
Lead paint disclosure

Fees:

Attorney Fees
Transfer agent fee
Title Charges

If you have any questions call your agent or me, I'll be happy to to help you!

Get Your House Sold with These Home Improvements

Soon to be sellers are always looking for ways to get their homes to sell quickly.  Some home improvements to consider are:

Landscaping:  Many buyers drive around areas in which they are interested.  Nice curb appeal can make a huge difference in someone wanting to see your house and someone checking out the house for sale down the corner.  Some low cost ideas include weeding, mowing, cutting back trees and shrubs, adding fresh mulch, or adding a few colorful plants along the front or lining the sidewalk.

Paint walls and molding:  Fresh paint (most buyers prefer neutral colors) can make bring a dreary interior some new life.  Another improvement is to add crown molding, which helps a room look finished, or paint the molding the same color as the room which can help visually elongate the height of the room.

Stain/paint cabinets and upgrade kitchen island countertop:  Instead of ripping out cabinetry and replacing with new ones, which can be terribly expensive, try stripping the paint off and staining or painting.  If cabinets seem really dated, try just replacing the doors, not the entire cabinet.  And a new island countertop can add a facelift to a tired kitchen.  Granite is very popular in most mid to high priced homes, but if you can't afford the slab, check out the prices on granite tile, or go directly to a stone yard and cut out the middle man.

Match kitchen appliances:  Stainless steel is what most buyers like in a home, but whatever color you choose, make sure all the appliance match.

Update light fixtures, ceiling fans and bathroom pieces:  Brushed nickel and bronze look so much better than the dated shiny brass most of us remember from the 70's.  It is definitely worth it to go to your local home improvement store and switch these items out.

Clean grout:  Clean the grout in the bathroom, and if necessary, replace toilet and shower head.  This can give a bathroom a cleaner feeling.  No one likes a dirty bathroom!!

These are just a few things you can do to get your home ready to sell.  If you are looking to sell your home in the near future and would like some other ideas, please feel free to call me.