How Much are Closing Costs? | Closing Costs for BUYER | Closing Costs (REAL NUMBERS & HOW TO SAVE)

hi this is Shahid ahel the real real tour getting you over the hill to home ownership as promised I'm going over closing costs today now closing costs are additional costs not your down payment down payment is what's going to go toward the purchase of the home it comes off of the loan amount but closing costs are additional fees that you have to pay that go with the closing process okay so I've detailed each one of them this these are closing costs for an FHA loan and in general you can estimate about 3% of the sales price of the home for closing costs in general but they do vary your state is going to be different because I'm I'm gonna tell you why your state may vary the price of your home of course may be different the loan amount will affect it as well so I'm gonna give you the typical closing cost that you're likely to see when you're buying a home and stay to the end cuz I'm gonna tell you how to save you on those closing costs so I have my water this is going to be a long one but stick with me you will learn something put any questions in the comments and I'll be sure to answer it so let's get into it number one so I put them all in different colors but number one our loan fees so loan fees are things that the lender is going to charge you to close this loan okay so the lender has to make money and they are there and they're gonna make sure they get there their money at closing and the interest that they're gonna charge you over the years but they're gonna get some money from you at closing and these are the typical loan fees that are included okay so number one is origination origination is them originating the loan basically based just opening the loan for you basically it's just a lender fee is generally 1% of the loan amount the loan that we're using is FHA and I think housed at 220 mm so I did a house at 222 thousand dollars the payment for this house was about one thousand four hundred and ninety seven dollars I believe so that's your monthly payment but these are your closing costs so it's very important it's FHA the home price is two hundred and twenty two thousand and we'll go from there so origination is generally 1% of the loan amount 1% and when you're getting a loan you'll get a loan estimate and all of these fees will be on your loan estimate so you need to look at it very carefully to know exactly what fees you're going to be required to pay at closing now the estimate cannot vary that drastically from the final disclosure statement so by law they're required to give you a final version of the estimate is called a closing disclosure at least 3 days prior to your closing so you don't know what the estimate how much you are I'm going to have to bring to close and how much money and you'll also know what all the estimates are if the estimate and the closing disclosure vary too much it's really against the law and it's different but they can't they can't tell you one price when you did the estimate you go through the loan and then you get to closing it's like $5,000 more okay so the estimate and the closing disclosure should be very very similar so let's go back to it so origination fee for this loan is 2142 a Gao review they're reviewing your documents 315 loan processing $300 underwriting 375 so everything that they have to do to process your loan then looking at your financial statement making sure that everything that they see all the documents everything they're dealing with the contract they are charging you for that and these are some of the feeds the fees vary that's why I suggest you get three you go to three different lenders when you're shopping for your loan then you can see some people might have high fees some people have low fees you can figure out which one is gonna be the best interest rate and the best closing costs for you so there are more fees next is your appraisal fee you pay for your appraisal that the lender is going to do on your home so for this one it was 525 I taking a short break please like this video subscribe to my channel for new videos every week blood certification fee there's only $13.50 but they're gonna make sure your home does not require flood insurance so they have to they charge you a fee for that mortgage insurance premium when you're getting an FHA loan there's a mortgage insurance premium that needs to be paid it is 1.75 percent of your loan amount now I put off the star by this because you can finance your mortgage insurance premium when I talk about that later so you can roll in your mortgage insurance premium into your loan because that's a significant percentage and that's going to bring your closing costs much higher because again it's 1.75 percent of your loan so mortgage insurance premium for this house was three thousand seven hundred and forty nine dollars all right now this my third one third and last title so what's a title that means the person that is selling you this house owns the house they have the legal right to sell it to you now because so many a lot of times depending on the age of the house it meant transferred ownership a lot of different times so title insurance is important for you to have just in case one of those transactions wasn't executed properly let me give you an example a a seller dies okay a seller dies and they leave there they have no will they leave their home to their children or their children are the next in line to get the house now the children most of the children live in the state they go ahead and say there's four kids and live in the state they split up all the proceeds maybe there's a fifth child I didn't even know mom died didn't know what happened didn't know all the money was split they find out later mom died left them the house and he didn't get any of it he can go back and Sue and he may still have a property ownership right in the house that you bought now it happens very rarely but it's important for you to have title insurance now it's important because for the lender to have it to because they they if you stop paying them they're gonna take back your house as collateral so they're gonna make sure that that house has the right insurance it's paying their taxes all of those things so they're going to have you pay for their title and certain insurance or your title search then how you pay for their title insurance all it's part of your closing cost so this is kind of a big one you have a title letter that's $35 lenders policy that's the lenders title policy 540 settlement of the title 595 and then a title exam $200 okay those are all your loan fees they're going to get into some totals but again in the comments you have any questions about the loan fees let me know I think I'm gonna need some more water so let's go to the next one and hopefully you see everything okay if not just let me know we're going to taxes taxes taxes because the government must be paid the city government and usually the state government depending on their state may vary an amount but there will be some taxes that you have to pay as part of this sale so there's a recording fee because now you have to be recorded in your state or in your city or in your County that you are the owner of this home so the recording fee for this closing was $95 I'm actually gonna move this over a little bit for this clothing with $95 the transfer tax because they're going to tax you from transferring it from one owner to another owner was two hundred and thirty two dollars and the state tax was six hundred and forty four dollars these are all percentages so it's gonna vary based on how much our house costs remember this house cost is 222 thousand dollars okay and it's an FHA loan taxes generally regardless of loan type will remain consistent and the third type of closing costs are prepaids and excess gross or prepaid the ex grows now prepaids are something that you're going to pay upfront and they're going to either save it for you or and I'll go through some examples but your pre paying for certain things or the lender is holding it for you waiting to pay it out for you so those are taxes and insurance for the most part okay so there when you have homeowners insurance so you get homeowners insurance just case your house burns down you have a earthquake tornado god forbid something happens you have to have homeowners insurance on your property especially if you have a loan attached to it right so they're gonna make you pay whether you get in Geico progressing in whatever whatever your insurance company is for your house they're gonna have you pay one year premium up front so for this house the premium for one year was 1342 dollars also you have prepaid interest in another video so if you haven't seen my videos on the cost to buy a house you are going to skip a month so if you close for example you close in January you do not pay your first mortgage payment until March so whatever a month you close in your first payment is not due until two months from that time so you close in January you skip February your first payment is due in March however when you close in January they're gonna make you pay the interest on the loan okay so don't make you pay the interest so depending on when you close you may have you know several days of interest you made this helped say you close at the end of the month you may only have a couple of days of interest so for this example they have prepaid interest of a hundred and ninety four dollars okay I think they paid they might have posed in the earlier part of the month okay so prepaid interest with 194 dollars for the loan now you have your homeowners insurance that is going to be paid upfront to the lender so the lender doesn't want to start out at zero they want to have some money in the bank to pay for your insurance just in case so say you buy this house and you the first month or whenever your first paint gonna do you don't make it maybe you lost your job maybe something happens they can still have the money in escrow to pay your homeowners insurance so they're gonna pay when they escrow they pay for you unless you have a lot of equity generally 20 percent or more depending on the lender you they pay your homeowners insurance and your taxes out of your mortgage payments they don't trust you to send it to pay your insurance every month they don't trust you to pay your taxes and they need to make sure if they ever have to foreclose on you then your taxes up to are up to date and your homeowners insurance is up to date because if they foreclose and then there's a fire or even before their court clothes say you stopped paying them and there's a fire and your insurance lapse then they don't have an asset to collect they have no collateral if that house gets damaged so they're gonna make sure those payments are paid so they're gonna put some money the government any payments yet they're gonna put some months I'm in escrow so they have that money to pay now when you sell your house they'll refund that money if there's money left in escrow that they were holding for you or that you prepaid they will pay that money back but until you sell it that money's gonna stay or until you have significant equity if you're doing my conventional loan that money is going to stay okay so they want this lender wanted three months of homeowners insurance premiums so they wanted three hundred and thirty five dollars they also wanted three months of property taxes that was eleven hundred twenty-one dollars this also has is other little fees this community for this clothing had an HOA so a homeowner's association to pay for the pool the tennis courts any other amenities in subdivision so they had a an initiation fee and sometimes you'll see that if you have a homeowner's association to join the association but you don't have a choice to join or not join the most associative Association sorry if you buy a house you have to join in that subdivision you have to join so the initiation fee for this one was 250 dollars and then lastly your owners title insurance in the earlier the loan fees you paid for the lenders title insurance but you to cover yourself as well so you buy your own title insurance policy now you can shop around for some of these things like the title insurance and that sort of thing most people don't do it because it inconvenience and they're not generally going to save that much shopping around but you can shop around for some of these items it will be starred on your closing cost on your estimate from the lender it'll say you the the buyer is able to shop around for these items so you can before you close you can shop around and see if you can find a lower rate somewhere else now I told you I'm gonna tell you the totals and how to save so let's get let's add up all of this and I did all these paper so I figured it'd be faster than me having to write it all up so the total closing cost for this loan don't have a heart attack I'm gonna tell you how it's paid the total closing cost for this loan was thirteen thousand five hundred and twenty five dollars and fifty cents when we had that um thought well it was a flood certification that was thirteen fifty was thirteen thousand five hundred twenty-five dollars now this is if you didn't finance that FHA 1.75 percent mortgage insurance premium you would have to pay all of this the majority of borrowers financed that in with the loan so the actual closing costs were nine thousand six started nine thousand seven hundred six dollars and fifty cents now what's great about clothing cost either savings not what's great about them but some some good news okay is that the seller is allowed to contribute to your closing costs and that's why agents are so important because they're going to negotiate in most cases especially for first-time buyers that don't have a lot of savings they're going to negotiate that the seller pays some of the closing costs because the seller cannot contribute to your down payment but they can contribute they can get all your closing costs in a lot of cases you may have to pay some of your prepaid but they can pay a significant portion of your closing cost for the so for this example I'm other paper and I'm gonna get some water so for this example the seller pays let's cross this out the seller pay them take this off so it was nine thousand seven hundred seventy six the seller paid six thousand six hundred dollars so that left the buyer to finance one three thousand one hundred seventy six dollars in closing costs now this is much easier than this amount now so in that but doesn't include your down payment so the seller had to do their three point five this FHA loan they have to do their three point five percent down payment plus this okay to cover the closing cost because the after the seller contributed to the six thousand six hundred dollars and that gets credit to them so if they're making money from the sale they'll just take some of their I'm earnings and they will put it to the buyer to help them with their closing cost now I'm give you several aces to save number one make sure you're quoting with at least three different lenders all lenders have different fees you should also quote with the credit union so what one of those three should be a credit union credit unions traditionally have the lowest closing cost but that's not first start in depending on where you are but you want to quote with three different people in my earlier video I said once you get the eight steps watch that video if they eight steps to homeownership I said make sure you quote with three different people and get organized first because if you're organized when you apply for one you'll pop in the two you pop for three and then all of their estimates and all of their information comes back at one so it's not that difficult you're gonna see who's gonna give you the best interest rate you're gonna see who has the best closing cost so you know that you know if you have limited funds as the first-time homebuyer you want to make sure you're getting you're not spending extra money now if you're doing downpayment assistance your lenders might be limited but you still can shop around to see which lenders that offer that participate in the program have the lowest closing cost numbers so I said number one was shopping around getting at least three quotes one is going to be a credit union even if you're not a member of the credit union join like open up an account and join so that's number one number two is and I said this before have the seller contribute to the closing cost now the more competitive the better the market is for sellers if it's a seller's market then they're less likely to give so much in closing costs now another way around that is you can have them increase the price at the house a little bit if they could you know if there's enough equity to do that and it will appraise for that they can increase the price of the house and then give you that money at closing so that's one way around that they are refusing to give you that much in closing costs down payment assistance down payment assistance will cover one or the other or both so sometimes you get downpayment assistance from your state to cover the down payment and then you'll have to save to pay any of the closing costs the more expensive the house of course the more expensive the closing costs because some of these costs are by percent of the loan amount so just be mindful of that but downpayment assist we'll help you cover some of this I have one client I'm in Georgia yeah I don't know yet I'm in Georgia I have one client that's only contribute Odle fees is about sorry they have the it's required a thousand dollars that he has to contribute so a thousand dollars it's the only thing he I think that's it he had to pay for his inspection and he had to pay for his appraisal fee but other than that he didn't have to do anything so he's under $2,000 in total they covered all of his closing costs and all of his down payment all right gift fun so another way you can get some of this paid some lenders and some loan types allow you to have gift funds that means your grandmother your mother somebody else who has some money maybe you're getting married and that's one of their gifts to you maybe they're gonna be living with you or something like that they don't have to be on the loan but they can gift you some of the down payment or they can give ya sorry gift you some of the closing costs and lastly once you try to do all of those things you have to save um if you didn't watch my video how to stay for a down payment fast save save your money go on a spending freeze until you get I remember when my husband and I were saving up for our down payment is tomato we need to make sure we save didn't know how much the seller would contribute so I had to make sure that we had the closing cost and the down payment just in case and so our computer was like really acting up we was getting old and I said we're not buying a new computer print stuff at work work on your computer work pay bills at work like our computer I didn't just jump and go ahead and say let's get a computer because we had a goal to save so every dime telling it so the spent $700 $800 computer it wasn't part of the plan so when you're really focused on saving don't let anything stop you reach your goal figure out what you need to do to get it done don't let any of this even though maybe scary people buy houses every single day and they're no different from you they just figured out what to do implements it and they did it thank you so much for watching please like and subscribe to my channel if you haven't already thank you for joining me and join me next week for new videos every week

Channel: Shaheedah Hill

Views: 345,223

Keywords: Shaheedah Hill, Atlanta Real Estate, How much are closing costs, Closing costs for buyer, Buyer closing costs, What is included in closing costs, what are closing costs, closing costs, Who pays closing costs, first time buyers, first time buyer tips, how to pay for closing costs, down payment assistance programs, home buyer grants, closing costs explained, closing costs on buying a house, how to pay closing costs, how to save on closing costs, First time buyer closing costs

Id: bn5J2MEubwA

Length: 22min 1sec (1321 seconds)

Published: Thu Feb 20 2020