Suggestion #7
[/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”3.27.4″ text_font_size=”40″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” text_font_size_tablet=”” text_font_size_phone=”35″ text_font_size_last_edited=”on|phone” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]Pay Your Buyer’s Closing Costs[/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”3.27.4″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
We suggest that you offer to pay the buyer’s closing costs and or closing points to make your home more attractive by making it more affordable.
Please click here to view more information on closing costs.
[/et_pb_text][et_pb_tabs admin_label=”Tabs” _builder_version=”3.0.87″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” use_border_color=”off” border_color=”#ffffff” border_style=”solid”][et_pb_tab title=”Closing Costs Explained” _builder_version=”3.0.48″ body_font=”||||” body_line_height=”2em” tab_font=”||||” tab_line_height=”2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” body_line_height_tablet=”2em” body_line_height_phone=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em”]When settling the purchase of a home, closing costs are charged to the buyer and seller to compensate the parties involved in funding, approving and insuring the sale. They’re not included in the listed purchase price of real estate, typically, and can be a surprise most homebuyers aren’t prepared for. For buyers, at least, closing costs can be added to the mortgage amount and repaid in installments. Here are the most common costs: [one_half]Closing Costs for Buyers
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- Lender fees
- Third party fees
- Homeowner fees
Closing Costs for Seller
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- Real estate commission
- Title transfer fees
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Closing costs for homebuyers total around 3% to 5% of the home’s purchase price, which can add thousands of dollars to the cost of buying a home. For example, closing costs that amount to 5% of a $300,000 home would cost $15,000. Because buyers tend to use the majority of their savings on their down payment, closings costs are often financed through lender credits, which lower upfront costs in exchange for higher monthly mortgage payments.
[/et_pb_tab][et_pb_tab title=”Buyer Closing Costs” _builder_version=”3.0.48″ body_font=”||||” body_line_height=”2em” tab_font=”||||” tab_line_height=”2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” body_line_height_tablet=”2em” body_line_height_phone=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em”]For buyers, closing costs can be divided into two main categories: costs associated with buying a home and taking out a home loan; and costs associated with owning a home. In the first category, lenders and third parties charge borrowers a variety of fees to cover the costs of processing an applicant’s paperwork, examining their unique case and eventually creating a loan. Buyer closing costs which cover homeownership include property tax, homeowner’s insurance and, if applicable, homeowner’s association dues. These fees can often be rolled into the total mortgage loan amount and paid through monthly installments.
| Closing Costs for a $180,000 Home | Amount |
|---|---|
| Lender Fees | $1,802 |
| Third Party Fees | $3,870 |
| Homeowner Fees and Prepaid Costs | $2,382 |
| Total | $8,054 |
Projected costs from the Consumer Financial Protection Bureau’s example Loan Estimate Form, accounting for a $162,000 mortgage ($18,000 down payment, or 10%) and a 3.875% interest rate.
The government requires that lenders list closing costs on every mortgage applicant’s Loan Estimate, which lenders provide to potential borrowers within three days of submitting an application. The same closing costs must also be listed on the official Closing Disclosure document, and cannot change except under special circumstances. For example, closing costs might rise if a borrower was deciding between a 30-year and 15-year mortgage and changed their desired term length from the Loan Estimate to the Closing Disclosure.
Below is a breakdown of some of the common fees charged to buyers at closing. While the lists are not exhaustive, as the type and amount of fees charged can vary widely, they are meant to give you an idea of what to expect when buying a home. Because closing costs vary by lender, it’s important to shop around and compare the charges on loans that might appear to be otherwise similar.
[/et_pb_tab][et_pb_tab title=”Seller Closing Costs” _builder_version=”3.0.48″ body_font=”||||” body_line_height=”2em” tab_font=”||||” tab_line_height=”2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” body_line_height_tablet=”2em” body_line_height_phone=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em”]The seller’s largest cost at closing is usually the real estate commission, which is split between the listing agent and the buyer’s agent. This fee ranges from 5% to 8% of the home’s sale price, though 6% is standard amount. Sellers also pay fees related to the property title, which is the legal document that secures homeownership. The most common of these fees is the “transfer tax,” which transfers the seller’s legal property rights to the buyer. Real estate transfer taxes vary according to region. In New York, the transfer tax costs $2 for every $500 of home value, meaning that the seller would pay $800 for a $200,000 home.
In some cases, sellers make concessions and cover some of the closing costs that are charged to the buyer. For example, veterans of the armed forces who finance their home purchase with a VA loan can only pay certain closing costs. To finalize the transaction, a seller might cover some of the fees which veterans aren’t allowed to pay, like attorney fees and document fees.
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