Posted: May 24, 2010 By: Dave Ralston
When you get approved for a home mortgage you should ask, “What are my closing costs?” You should see them in writing. Interest rates are important, but your ‘closing costs’ are equally important. If you have a rate of 5% on a $300,000 loan with closing costs of $9000 quoted from one bank and you have a rate of 5.5% with 0 closing costs from another bank which is better?
It depends how long you will live in the house. You will need to see the amount of both monthly payments and do the math.
If one bank offers you a rate of 4.5% with $15,000 of closing costs it is probably not a better deal. You want to see the detail of these closing costs and look for junk fees.
If you do want closing costs paid by the seller when you buy, tell your agent early on. Make sure you Realtor knows the amount of closing costs you would like paid. Negotiate up front with the offer! It’s a buyers’ market now – should not be a problem.
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I went to Wells Fargo, my checking acount is with them, and they said I would qualify for no closing cost to refi my condo. The I went to get a second opinion for a “mortgage broker” and the interest rate was almost 1 1/2 percent less. When I told the Wells Fargo guy that he was too high, he gave me another estimate with a lower interest rate and more closing cost than the broker. Yikes! I guess you pay some where in the end. Thanks for touching on this, because there really isn’t a free lunch. 🙂
If I buy real estate outright with no loan, are there closing costs?
There are closing cost other than the mortgage cost. The answer is yes even if you do not have a loan you do have closing cost. Some examples of these cost would be Title Insurance, Escrow fee, Home owners insurance (recommended), prorated taxes, most assessments stay with the property, and home owners association dues are just a few.
Working with a good agent will help you to discover the not so obvious cost associated with buying a home so your not surprised after the fact.
Hi, how much closing cost do the seller’s normally provide?
Hi Emily,
Each situation will depend. For instance: the seller’s ability to contribute, the loan may limit the amount, or if it’s a competitive property with other offers. I don’t see more than 3% in most transactions if that helps you with a amount ceiling.
Hi, I’m very interested in understanding more about becoming a home owner… But am afraid I will take more than following your blogs. What do you suggest?
Hi Monica,
The home buying process is different for everyone. You may be comfortable following a BLOG and getting some answers, or you may be ready to meet with an agent and discuss what your needs are. I would suggest whatever is more comfortable for you. And remember just because your meeting with an agent doesn’t mean you need to buy something now. Just speaking to a professional and getting answers to your specific situation may help lead you to what you timeline will look like. Best of luck!