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    Tip Tuesday: Understanding Closing Costs

    Closing costs?  What are they and how much should I expect them to be?

    In essence, closing costs are the fees paid when the loan transaction is complete.  Some examples of these fees include: title insurance, recording fee, attorney fee, homeowners insurance, underwriting fee, paid back taxes to seller that they may have prepaid (i.e. if they

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    paid taxes for July-December and you close in October then you’d owe them the taxes they paid for October – December), oil adjustment (if you closed with 1/2 tank left in the oil then you’d owe the seller the payment for that 1/2 tank) and homeowners insurance.

    Fun Fact:  Our Buyer’s agent fee is paid by the Seller as a part of their closing costs so our expert service is available to you free of charge!  Did you know that some companies charge up to $300 up-front as a signing fee to use a Buyer’s Agent?  That’s $300 whether you buy a home or not!  Harrison Real Estate at Coldwell Banker charges you ZERO!

    Typically, you can see closing costs range from about 2-4% of your purchase price.  For example, if you purchased a home for $250,000 then you can expect your 4% closing cost to be roughly $10,000.  When getting a pre-approval and filing out a loan application, it’s important to discuss closing costs and what your Lender’s estimate for closing costs will be.

    Is it necessary to have all of that cash?  No.  There are some loan programs (that you must qualify for) that factor closing costs into the mortgage, but more commonly, our fabulous negotiation skills can convince the seller to cover partial or all of the costs! However, many mortgage programs have limitations in terms of how much of the closing costs you can ask for from the seller so it’s always good to know this and have a back-up plan in case you need to end up paying even only a portion of the costs.

    To get more questions like these answered, our friends at First World Mortgage in Southington offer a great Homebuyer’s Guide.

    If you’d like to get your complimentary Buyer’s consultation underway to get more questions answered and begin your home search, contact us!

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