Closing Cost Tips
A couple of things I picked up during my house purchase....
I had heard the horror stories from all my friends. Make sure you have $3000.00 hidden away in a bank account somewhere because you will be hit with surprises at closing. Almost every friend told me this, and some have bought 2-4 houses now.
Another, some told me, was do not tell them you have $10,000.00 (or whatever) to put down because they will use up all of that, then hit you with another $3k at closing.
I was not going to get hit with that madness. So I went to a CU, versus a broker. I was approved for more, took a bit longer, got better terms that brokers had offered me, and then I got to the "truth in lending".
1. Double check your taxes.
On mine, it showed city $250 a month, and county $200.00. That was around $450.00 of my house payment estimate. Putting my annual around $5400.00 in property taxes. In reality, they are just under $2000.00. So my monthly is roughly $150.00, and the slight difference in monthly house payment is around $750.00 instead of $1150.00.
Kind of a difference there.
2. A number of the 'closing costs' are not paid at closing.
Your application fee. Appraisal. Some of the other things listed there you will pay upfront, and get back at the time of closing. You really need to keep track of these items and subtract them from the money you plan to bring. For example, I have to remove roughly $1000.00 from the money I thought I had to bring because I already paid it in Ernest money and prepaids.
3. The max you are going to get towards closing costs is 3%. No more cash back, or 6% etc like the good ole days. 3% is about your max.
4. Allowances you can still get. I am getting a $4100.00 in carpet allowance. Check will be cut to me AFTER closing. It can't be on any of the docs submitted on the loan. Apparently that is some new HUD restriction. The relo company did not want to do the carpet before I moved in, nor want to take that off the final price. So that was the deal.
5. You 3% closing cost is NOT covering any money you have to put down as a payment. I had my Realtor fight me on this for a week. The bank and I were both on the same page. 5% down has nothing to do with closing costs. The down payment is separate from closing costs, and prepaids. That 3% you get covers that kinda shit. Finally he got it after giving me wrong info.
Why are these things important?
Well, I had to have my 5% down. On top of that, I need whatever is not covered by the 3% in closing costs. Based on the original estimate, I was going to need around $4500.00 or somewhere in there. Versus the TRUE amount of around $700.00.
A small discrepancy.
I had heard the horror stories from all my friends. Make sure you have $3000.00 hidden away in a bank account somewhere because you will be hit with surprises at closing. Almost every friend told me this, and some have bought 2-4 houses now.
Another, some told me, was do not tell them you have $10,000.00 (or whatever) to put down because they will use up all of that, then hit you with another $3k at closing.
I was not going to get hit with that madness. So I went to a CU, versus a broker. I was approved for more, took a bit longer, got better terms that brokers had offered me, and then I got to the "truth in lending".
1. Double check your taxes.
On mine, it showed city $250 a month, and county $200.00. That was around $450.00 of my house payment estimate. Putting my annual around $5400.00 in property taxes. In reality, they are just under $2000.00. So my monthly is roughly $150.00, and the slight difference in monthly house payment is around $750.00 instead of $1150.00.
Kind of a difference there.
2. A number of the 'closing costs' are not paid at closing.
Your application fee. Appraisal. Some of the other things listed there you will pay upfront, and get back at the time of closing. You really need to keep track of these items and subtract them from the money you plan to bring. For example, I have to remove roughly $1000.00 from the money I thought I had to bring because I already paid it in Ernest money and prepaids.
3. The max you are going to get towards closing costs is 3%. No more cash back, or 6% etc like the good ole days. 3% is about your max.
4. Allowances you can still get. I am getting a $4100.00 in carpet allowance. Check will be cut to me AFTER closing. It can't be on any of the docs submitted on the loan. Apparently that is some new HUD restriction. The relo company did not want to do the carpet before I moved in, nor want to take that off the final price. So that was the deal.
5. You 3% closing cost is NOT covering any money you have to put down as a payment. I had my Realtor fight me on this for a week. The bank and I were both on the same page. 5% down has nothing to do with closing costs. The down payment is separate from closing costs, and prepaids. That 3% you get covers that kinda shit. Finally he got it after giving me wrong info.
Why are these things important?
Well, I had to have my 5% down. On top of that, I need whatever is not covered by the 3% in closing costs. Based on the original estimate, I was going to need around $4500.00 or somewhere in there. Versus the TRUE amount of around $700.00.
A small discrepancy.
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