Closing Costs...The things I don't know...That I now know
I don't know about you but one thing that severely stresses me out is when I am asked a question...and I don't know the answer. It becomes a challenge to me to find the answer to that question and relay the answer confidently and with understanding. My worst nightmare could be a list of questions that I can't answer. Anyways...this happened to me the other day. I'm in a multiple offer situation and the sellers agent needed our highest and best offer. In order to come to that conclusion my buyer wanted to know an estimate of what her closing costs may be....and you guessed it...I was speechless.
The great thing about these situations and the way I look at them is this.... I will know the answer in a little while when I educate myself on it....but then...I will know it forever. In this certain situation I called everyone I knew that may know the answer to this question and I got everywhere from "I don't know myself, to 4% of the purchase price...so I was looking at somewhere between $0-$6,000 and that's a large range. Finally I got an answer that I was confident would fly till the next morning when I could sit down with an escrow officer and make sure I understood this question. That being said, I'm now relaying what I've learned.
Closing costs consist of 3 different types:
1. Escrow Closing Costs
2. Title Closing Costs
3. Lender Closing Costs
Escrow Closing Fees - Courtesy of the wonderful Judy Jackson at Resorts West Escrow
Sale Escrow Fee- $250 Base + $2.50 per $1,000 per side (Minimum of $450 per side).
(I.e If your house is closing at $150,000, you do (150 x $2.50) + $250 =$625 which both buyer and seller pay this amount). If you are purchasing a regular resale this is part of your closing costs.
Short Sale & REO Escrow Fee- $350 Base + $3.50 per $1,000 per side (Minimum of $600 per side).
(I.e If your house is closing at $150,000, you do (150 x $3.50) + $350 =$875 which both buyer and seller pay this amount). This is what you pay if you are purchasing a Foreclosure or Short Sale property. The reason it is more is it covers the fees that the seller and the bank both won't and can't pay for.
Loan Tie-In Fee- $300. If you are requiring a loan this will be part of your closing costs. This is the fee you're paying to have the escrow officer work with your lender. Only the buyer sees this cost.
Document Preparation Fee- $100 per document (Grant Deed, Affidavits, Inter-spousal Deeds, etc). At the beginning it is 50/50 split. The buyer pays $50, the seller pays $50 for the grant deed to be prepared. From there any additional document and fee that comes with it is paid by the party requesting the document.
Demand Fee-$75 per loan payoff (including HOA and Beneficiary Statements) This is normally a seller closing cost if the seller has a loan to pay off or an HOA.
Messenger Fee-$50 per side - For the escrow office I normally work with they have the Title Companies from off the mountain that come up 2x a day. They pick up and drop off documents for recording purposes...if you see this fee you know you are close to closing...it's a good thing.
Wire Fee- $25. This is for escrow to send or receive any wires.
Overnight Fee- $25. This is only seen if Fed Ex brings up loan documents then the fee is passed along to you. Again, a great fee to see since things are moving along.
Notary Fee- $10 per signature during hours and $150 for after hours signing. There are no charges for grant fees. You can opt for the Document Signers to come to you at $250 if it is inconvenient to make a trip to Big Bear. They go anywhere in all 50 states.
1099 and FTB Processing Fees- $45 per person. Sellers fee if there is a 1099 or state withholding.
Loan Escrow Within an Escrow- $250. If the seller is carrying the loan the buyer may see this as a closing cost.
Exchange fee- $75. Usually on the seller side if they are doing a 1031 exchange for the documents and paperwork to be prepared.
NSF Fee-$25. This is generally from whomever sides this happens to and is just passed along to you.
Title Closing Fees
Owner Title Policy- Protects the buyer when purchasing the home that there are no problems with the home's title and the seller really owns the property. Click here to get a quote, varies depending on price.
Lender Policy-Lender may require this therefore would be seen on the buyer closing costs. Click here to get a quote, varies depending on price.
County Transfer Tax- $1.10 per $1,000 of the purchase price. Generally a seller fee.
Recording Fees- $100. Generally a buyer fee.
Lender Closing Fees
Every lender is different and with each lender you'll see some combination of these fees.
Report Running Fees
Loan origination fee, which lenders charge for processing the loan paperwork for you.
Attorney’s fees.
Discount points, which are fees you pay in exchange for a lower interest rate
Appraisal fee
Survey fee, which covers the cost of verifying property lines
Underwriting fee, which covers the cost of evaluating a mortgage loan application.
Lenders are required within 3 days to give you a good faith estimate of what closing costs could be. So with you having that number and the other two being easy to calculate we can determine quickly what the closing costs may be.
Lastly, it appears that closing costs vary anywhere from 2-5% of the purchase price depending on which of these fees you end up racking up. In a recent study they quote that buyers have paid an average of $3,700. Facts that I won't forget when I am asked next time.
The great thing about these situations and the way I look at them is this.... I will know the answer in a little while when I educate myself on it....but then...I will know it forever. In this certain situation I called everyone I knew that may know the answer to this question and I got everywhere from "I don't know myself, to 4% of the purchase price...so I was looking at somewhere between $0-$6,000 and that's a large range. Finally I got an answer that I was confident would fly till the next morning when I could sit down with an escrow officer and make sure I understood this question. That being said, I'm now relaying what I've learned.
Closing costs consist of 3 different types:
1. Escrow Closing Costs
2. Title Closing Costs
3. Lender Closing Costs
Escrow Closing Fees - Courtesy of the wonderful Judy Jackson at Resorts West Escrow
Sale Escrow Fee- $250 Base + $2.50 per $1,000 per side (Minimum of $450 per side).
(I.e If your house is closing at $150,000, you do (150 x $2.50) + $250 =$625 which both buyer and seller pay this amount). If you are purchasing a regular resale this is part of your closing costs.
Short Sale & REO Escrow Fee- $350 Base + $3.50 per $1,000 per side (Minimum of $600 per side).
(I.e If your house is closing at $150,000, you do (150 x $3.50) + $350 =$875 which both buyer and seller pay this amount). This is what you pay if you are purchasing a Foreclosure or Short Sale property. The reason it is more is it covers the fees that the seller and the bank both won't and can't pay for.
Loan Tie-In Fee- $300. If you are requiring a loan this will be part of your closing costs. This is the fee you're paying to have the escrow officer work with your lender. Only the buyer sees this cost.
Document Preparation Fee- $100 per document (Grant Deed, Affidavits, Inter-spousal Deeds, etc). At the beginning it is 50/50 split. The buyer pays $50, the seller pays $50 for the grant deed to be prepared. From there any additional document and fee that comes with it is paid by the party requesting the document.
Demand Fee-$75 per loan payoff (including HOA and Beneficiary Statements) This is normally a seller closing cost if the seller has a loan to pay off or an HOA.
Messenger Fee-$50 per side - For the escrow office I normally work with they have the Title Companies from off the mountain that come up 2x a day. They pick up and drop off documents for recording purposes...if you see this fee you know you are close to closing...it's a good thing.
Wire Fee- $25. This is for escrow to send or receive any wires.
Overnight Fee- $25. This is only seen if Fed Ex brings up loan documents then the fee is passed along to you. Again, a great fee to see since things are moving along.
Notary Fee- $10 per signature during hours and $150 for after hours signing. There are no charges for grant fees. You can opt for the Document Signers to come to you at $250 if it is inconvenient to make a trip to Big Bear. They go anywhere in all 50 states.
1099 and FTB Processing Fees- $45 per person. Sellers fee if there is a 1099 or state withholding.
Loan Escrow Within an Escrow- $250. If the seller is carrying the loan the buyer may see this as a closing cost.
Exchange fee- $75. Usually on the seller side if they are doing a 1031 exchange for the documents and paperwork to be prepared.
NSF Fee-$25. This is generally from whomever sides this happens to and is just passed along to you.
Title Closing Fees
Owner Title Policy- Protects the buyer when purchasing the home that there are no problems with the home's title and the seller really owns the property. Click here to get a quote, varies depending on price.
Lender Policy-Lender may require this therefore would be seen on the buyer closing costs. Click here to get a quote, varies depending on price.
County Transfer Tax- $1.10 per $1,000 of the purchase price. Generally a seller fee.
Recording Fees- $100. Generally a buyer fee.
Lender Closing Fees
Every lender is different and with each lender you'll see some combination of these fees.
Report Running Fees
Loan origination fee, which lenders charge for processing the loan paperwork for you.
Attorney’s fees.
Discount points, which are fees you pay in exchange for a lower interest rate
Appraisal fee
Survey fee, which covers the cost of verifying property lines
Underwriting fee, which covers the cost of evaluating a mortgage loan application.
Lenders are required within 3 days to give you a good faith estimate of what closing costs could be. So with you having that number and the other two being easy to calculate we can determine quickly what the closing costs may be.
Lastly, it appears that closing costs vary anywhere from 2-5% of the purchase price depending on which of these fees you end up racking up. In a recent study they quote that buyers have paid an average of $3,700. Facts that I won't forget when I am asked next time.
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