Buyer’s Closing Costs

Regardless of the type of financing you choose to purchase your home, there will be closing costs. These are fees to process the loan and escrow. Both buyers and sellers have closing costs.

These are the typical buyer closing costs:

* Title insurance premiums
* Escrow fees
* Notary fees
* Document preparation fees
* Document recording fees
* Prorated share of the property taxes
* Buyer ordered inspections (roof inspection, property inspection, etc.)
* Special deliver/courier fees
* All new loan charges (except those required by lender for seller to pay)
* Interest on new loan from date of funding to 30 days prior to first payment date
* Fire insurance premium for the first year
* Preliminary change of ownership fee
* Assumption/change of record fees for takeover of an existing loan

A buyer can request that the seller pay all closing costs. There has to be a compelling incentive for the seller to pay your closing costs which will depend on their situation and your purchase offer. Even if the seller agrees to paying closings costs, if you are setting up an impound account (taxes & insurance), the lender will require anywhere from 3 to 6 months of taxes and 1 year prepaid insurance (or more).

Also the criteria for seller paying all buyer’s closing costs on your mortgage type and down payment. On FHA mortgages the seller can pay up to 6.0% of the sales price in closing costs and prepaid expenses (escrow account) although some lenders are restricting it to 3.0% . Conventional mortgages, owner occupied, vary based on the down payment.Less than 10% down the maximum in seller contributions is 3%, if you put 10% down the maximum is 6%. With a VA mortgages the seller can pay all the closing costs and prepaids with no restriction unless it is new construction whereas it may or may not be limited to 4.50% of sales price.

Be sure to check with your lender and real estate agent prior to writing a contract so that you can make a knowledgeable offer.

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