Closing Costs for Buyer

When buying real estate in addition to the downpayment, there are also closing costs. The combination of your downpayment and closing costs is the total amount of cash required to close the deal.

How much are Buyer Closing Costs?

The average closing costs for the buyer are 1%-2% of the purchase price as a rough estimate. The biggest buyer side closing costs is the loan, so if the purchase is all cash your closing costs may be as little as 1% or 1/2 of a percent. If you are getting a loan then you will be closer to 2% and make it 3% if you pay a point to get the interest rate down.

At closing, Escrow prepares a closing statement, which is a record of the actual closing costs. After closing it is a good idea to review the closing statement make sure everything looks correct.

What is the typical closing costs for the buyer?

Here is the breakdown of the different buyer side closing costs:

Due immediately once in escrow:

Earnest Money Deposit (3% of purchase price) Refundable.

Appraisal (~$450)

Inspections (~$1,000)

Due at the time of closing:

Loan Origination Cost (~$3,000)

Loan Point (1 point loan = 1% of loan amount, no point loans have no points)

Buyer side escrow fee ($250 base + $1.75 per $1,000 of purchase price)

Lender title Insurance (None if all cash)

Prepaid Interest, Impounds for Property tax, and reserves, if required by the lender for the loan.

Proration on Property tax/ HOA Dues

Home Owners Insurance

Do buyers pay the broker commission?

Buyers often ask if they pay for the buyer’s agent real estate commission. The answer is NO. Buyers don’t pay the agent commission, the seller does. This is great for you as a buyer because it lowers the amount of cash you need to buy a property, but keep in mind you will have to pay both commissions when you sell. I say that it averages out to half a commission each transaction, but it is loaded on the backend. If you never sell, you never pay.

Seller Paid Closing Costs- How does it work?

With some deals, if you are running short on cash, and it’s a slow market, you may be able to work out a deal with the seller to help pay for your closing costs. Don’t expect to get any concessions on balanced or seller’s markets. For buyers with Low downpayment loans like FHA Loans and VA Loans, it is more common for sellers to pay for the buyer’s closing costs in order to help the buyer close the deal.

Contact

Topics

Speak to James

Are you interested in buying a home? Let’s chat today, click the button below!