| Buyer Fees - What to expect. |
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| Written by admin | |||||||||||||||||||||||||||||||||||||||||||
| Tuesday, 29 June 2010 21:47 | |||||||||||||||||||||||||||||||||||||||||||
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When it comes time to buy the first thing you're going to do is make sure you understand costs involved. Loans are very complicated and there are quite a few fees involved and then you have escrow accounts and title fees. I'll go over what you can expect so that you can plan your savings before hand and make sure you don't get gouged in the process.
Lender Fees:
There are three fees that change depending on the size of your loan.They are your down payment, your origination fee, and the cost of your credit report:
Down Payment (3.5% to 5%) Unless you are a Veteran you can expect your lender to require a downpayment. Conventional requires 5% down and FHA requires 3.5% down. Plan on having at least $3500 set asside for a down payment if you are buying a $100,000 home. (Veterans, you can still get a loan without any down payment!)
Origination (1% Typically) Some lenders charge an origination fee to make the loan. This is typically 1% of your loan value. So expect to bring $1000 to closing for your loan origination fee. Consider yourself lucky if your lender does not charge an origination fee. (Veterans, if you are a Disabled Vet, the lender may wave this fee.)
Credit Report ($20-$100) Your lender will pull your credit at least once, but often times your credit is pulled several times during the loan process. Most often it is pulled once by the loan officer and the once right before closing to insure that nothing has changed. Expect to bring about $40 to closing for a $100,000 loan. But don't be surprised if it is $100.
The rest of the fees are typically the same no matter the size of your loan:
Mortgagee Policy ($225-$350) This is an addition to the Title Policy that the seller usually provides that makes sure that your lender is protected from defects in title as well.
Appraisal ($425) Lenders want to make sure that the home they are lending money on is worth it.
Survey ($425) Your lender will want a survey of the property to make sure that there are no imcumbrances to the property.
HVCC Fee ($15) It used to be that your lender could call their favorite appraiser and ask them to establsih a value on your home for the lender. They can't do that any more. Now they are required to submit an order into a computer system which will then assign the task to a random appraiser. This fee maintaines that system.
Flood Cert Fee ($15) This fee is to check with FEMA to make sure your home is not in the flood plane and does not require flood insurance.
Processing ($425) This is how the loan company pays all the people in the back who handle your paperwork.
Underwriting ($400) The undwriting free pays for the bank to check up on all of your information and make sure that you are up to their standards. They are the guys that give you final approval on your loan.
Funding Fee ($350) This fee is for the lender transfering the funds to the seller.
Sometimes lenders will set up your first monthly payment a month or two out. In some cases interest will be due. Don't be surprised if you see a couple hundred bucks in interest on your closing statement at closing. Title Fees The Title Company is an integral part of your transaction. They take care of the legal issues of transfering a title.
Escrow Fee ($250-$350) The Escrow fee is what pays the Title Company for their time.
Government Recording Fees ($25) This is what it costs to record the deed into your name at the county.
Courier & Delivery & Copy Fees ($50) These fees are pretty self explanitory. It costs the title company to copy, coury and deilver papers here and there.
Costs That Aren't Really "Fees"
Insurance Your lender will likely require that your homeowner's insurance be paid up for a year in advance at all times. They will want that money at closing. Insurance varries greatly depending on the type of home you buy and thus the coverage you need. However, a pretty typical amount for a $100k home is about $1000 per year for homeowner's insurance.
Escrow Accounts If you are going to escrow your taxes and insurance so that they are made part of your montly payment, your lender is going to require that you put a certain amount into the escrow account up front. They typically want 2 months of insurance and 3 months of taxes. That means you need about $166 in your escrow account for homeowner's insurance.
In North Texas on average your taxes run you 3% of your home's taxable value per year (more or less). So on a $100,000 home you will be paying $3,000 per year as property taxes. That means you need $750 in your escrow account for taxes.
When it's all said and done there may be a fee or two that applies to your specific circumstance. Always add about $200 padding so that you're not surprised.
How it Adds Up On a $100,000 loan here are what the money looks like:
DON'T PANIC! Loan fees can add up, but you can finance in up to 6% of your closing fees into your loan. That will take care of almost all the closing costs so that you will can come to closing with little more than the down payment. Now, that's not too bad.
What you need is the Best Realtor to negotiate the purchase of your home so that you have minimal out of pocket expenses. Call me and I'll help you find a home and make it easy and painless.
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