What are Closing Costs When Buying A Home? (Breaking Down a REAL Closing Costs Sheet)

hello everyone and welcome to another real estate video this is Javier meet Anya the real estate YouTube guy here in Phoenix Arizona helping you accomplish your home goals so before I start this video I'd like to ask for a quick favor I don't ask for many favors in this channel okay maybe sometimes I do however it's been a nice year-and-a-half of doing this YouTube thing and my life has changed in ways I cannot express the start to just express gratitude on however one of my biggest goals was to reach 10,000 subscribers and I didn't think I was in to reach this until like my 30s right but I'm almost there last I checked I'm in the mid-90s a mining a house say hey check this guy out we're almost there and we're almost at 10,000 and by the looks of it it looks like it by the end of this month or if not next month I'll be able to hit it so you guys can help me out I would really appreciate that but no more begging so let's get to it today's video is about closing costs so a lot of people are surprised to find out when you're buying a house that hey not only do you need to come up with a down payment now you have to come up with closing costs and when you try to inquire onto why what is closing costs and why you need to pay it you find out that their loan cost title fees you know you're not really told anything so in today's video we're going to get a real-life closing that we had in the last few months and break down the actual closing cost of that transaction here in my possession is what's called the closing settlement statement and on it we will be looking at each individual fee which added up to a certain amount of money and break down what that means now your situation might be different you might be in a different state with more taxes there might be additional closing costs however this video can be used as a nice benchmark to at least to get an idea of what the average closing costs are as we're going through each one I'll be able to tell you well in your situation if your taxes are this or if they're situation if this is this it'll adjust up or down so we're gonna get to it guys so take out your pen and paper let's take the notes down so in this specific example I'm gonna use the total closing costs are gonna add up to six thousand six hundred fifty six dollars and 85 cents so most of the times when you ask a lender or realtor hey how much closing cost so I need from my transaction the number they will say is three percent so it kind of shocking for people because people having to save you know three to five percent for first-time homebuyers or even ten or twenty percent if you've saved a little more and now on top of that you're told hey I need to say about an additional 3% for the closing cost so if two towards add their one it's not always exactly three percent the number that I've seen in my experience is a floating number between five to seven thousand it doesn't matter if the purchase price of the house is one hundred fifty two hundred thousand or even up to 300 to 400 thousand I always see it from that 5,000 to 7,000 number now of course there's exceptions for example if you're buying a house with an HOA that has high transfer fees and you're using down payment assistance that has even higher fees on the loan side then of course it might be a lot more than seven thousand or the taxes are way higher in your state so you're paying a lot of more prepaid taxes then of course it'll be higher also it might be lower because you might be in a house if the taxes are super low there's no H away you know other lots of little factors like that that might adjust it so I would say in most cases the best way of finding out what your closing cost are is just ask your Realtor hopefully they've have experience of buying and selling houses in the area tell them hey can you pull up the last closing you've had in this area what were the closing costs there it's better to be safe than sorry and it's also better to to really know what the numbers gonna be and the second thing I have to add is there are some ways for you to not pay your closing costs they're gonna get paid either you're paying them or someone else is paying them but there are other ways for you not to pay them which we'll talk about that the end of the video so there's really four main sections for these closing costs that usually is the same situation for every every time so their first one is gonna be your loan charges the second one is going to be your in pounds the third one is going to be your title fees and the fourth one's to be your miscellaneous fees that are gonna adjust and depend on each situation so in this specific example this household for a total purchase price of $200,000 there was no HOA on this one so there's no HOA transfer fees however this was a down payment assistance program so they are at his fees there that wouldn't have to be there if it was a regular downpayment so we're gonna start off with our loan charges which you know mortgage companies that's how they make their money right so I Realtors and everyone else makes money off a certain percentage of total price of the house which in most cases the seller is paying out of the proceeds of what they're gonna make so that's not how the lenders get paid the lenders are getting paid through fees that they're charging to produce the mortgage usually it ends up being the biggest one so let's get to it so the first line you're going to see there is a prepaid interest so this specific house closed on the 25th of 2018 so this is how that works so people I've made a video in the past where I talked about a certain way to save up to $1,200 if you haven't watched it watch it here so there's a huge difference we've seen closing at the beginning month at the end of the month if you close at the beginning a month your first payment isn't due until you know want that month and the following month and the next month so it's basically two months as opposed if you close at the end of the month your your payment is still due at the end of the second month but it feels like the first option you'll save more money because your monthly there's two payments there's two full months of payments you don't have to pay so it feels like you're getting a better deal on the contrary they're actually charging your prepaid interest for each day of that month so in this case is closed on the 25th so there's only about four to five days of interest that they're charging you so that adds up to about two hundred twenty seven dollars now if you were to close this on the first well it's thirty two dollars fifty five cents a day so if you're closing on the first that's thirty days total so now we're looking closer to nine hundred to a thousand dollars of just prepaid interest so your closing cost instead of being sixty six hundred would have probably been a little bit over seven thousand just for that fact so there is a pro and con to it if you're closing at the beginning of the month you feel like you have a longer period but the closing cost you'd have to get more paid by by the seller or you just have to pay a little more upfront you know you're not getting that month for free you're paying it somehow some way the next one is a DPA funding fee this is a fee that you wouldn't have seen if you would have done a regular downpayment loan but that's four hundred dollars after that is your origination fee the processing fee tax service and underwriting fees so these four fees are the fees that so if you're out researching lenders and you're trying to ask more informed questions I would ask for the questions hey what's your origination fee your processing fee and your underwriting fee this is a pretty standard I this isn't what the lender I usually work with that seems a little higher on my side but this is the four the tax service I believe that's on that's just what they charge for you I believe it's to get your tax information for you so it might be just a standard fee they charge any time just even though they didn't need to use it you know how it is the one after that is the appraisal fee so a lot of lenders don't slaughter lenders just say hey can I have your credit card information because we're gonna order the appraisal and they do that within you know one to two weeks of buying house or sorry in contract so in some cases some cases in some cases the lender actually just orders the appraisal just orders it and puts it on their dime and what they do is they add it on the closing cost at the very end of the transaction so in most cases if you have enough closing cost the appraisal got paid through there now I know some lenders that either if they'd if there's not enough closing costs to cover that appraisal they'll just pay it out of their dime in theirs most situations if you didn't pay for your appraisal upfront odds are it's gonna be here one below that is the down payment assistance compliance the hilltop securities probably another little fee that you usually get paid off for a down payment assistance so total I see two different fees of downpayment assistance of about six hundred sixty five six hundred and twenty five part in that wouldn't have to been there if you would have used down payment so total all in all that's your total loan charges most cases this is the fees that people are like kind of grinding their teeth about however you know it is what it is this is what they charge the second one we're going to talk about is impound so in this situation there was only two different impounds so what they do essentially is they the way it works when you have a mortgage for a house you're not just paying one payment that is your whole mortgage it's your rent or like when you pay rent you pay we know a certain amount of money and that goes to pay our rent if your mortgage is different there's different sections that are broken down there so you know there's your principal there's your interest is your taxes your home insurance your mortgage insurance all add it into one so every time you make a payment you're paying 1/12 of your tax and a twelfth of your home insurance and when that premium is due that annual premium is due or in some cases for your taxes every six months whether do the the home insurance home mortgage company takes it out of the account that they've been in which is called an escrow account or and pound account and they pay it so you're probably wondering well where does the first year of home insurance get paid then well that gets paid through your home insurance premium through your closing cost not only do they charge you your first year of home insurance premium through your closing costs on top of that they get an additional three months of impounds for the following three months for the home insurance that way to kind of pad that account they always you know sometimes your insurance goes up or down whatever the case may be they want to at least Pat it somehow that way you know it gets started to get start premium you have to pay right this is like part of something that you're paying so you get someone else to pay this for you that's just kind of just leveraging your interest a little better so a total total of those in pounds because there is no HOA here if there was an HOA that you sometimes HOA requires a month three months six months in advance and that would be on the impound so if your HOA was $50 a month and you needed three months in advance and it'll be an additional $150 here so in this situation with that not being in the picture it's just strictly your home insurance premium your home insurance three months and your taxes three months so that's the second section your third section is the title company so the title company is essentially the company in the middle that is a managing the title making sure it's a clear title if there's any title issues they've made it clear it up right away there's any like additional impounds or people that seller owes money to certain people and the title you know they make sure to pull that up and they get gets paid accordingly that way when you move in you don't get a knock on the door saying hey I actually own 20% of this house you owe me money right so the title company does all that it's also where you deposit your earnest money is where your deposit your down payment that's where the lender sends all the funds and they're the ones that manage all the documents all the fees and they're the ones that do all the middleman work first one is the extended lenders policy fat ko other than being a funny name just title lender policies is something you have to pay environmental protection lien $100 closing protection letter $25.00 courtesy signing fee this is a fee that looks like they they just asked for in case you need the signing fee a lot of times with most of these fees like the signing fee and the closed protection they that's optional like if you're not gonna sign in person or at the if you're gonna be signing at the office you don't need to pay $125 to pay for a notary so I always look through these before you close and make sure to try to take these extra fees out escrow fee is a fee that I think is split 50-50 with the buyer and seller at least in Arizona and I believe that lenders policy fee as well is also split 50/50 well you're not gonna see here is the title policy and that's because in Arizona the seller takes care of that but that's it for the title fees you know it doesn't really add up to much what's about a thousand so it's a good chunk of it so in some cases if you have a higher price point or higher a purchase price of the property then of course there'll be a lot higher it's always a certain base on a certain percentage my rule of thumb is 1 percent of the purchase price is usually gonna add up to the title fee so in this case because it was a $200,000 house it was about 2 1 percent a little bit under however remember the seller paid for a good chunk of those as well and the fourth and final category is the miscellaneous stuff this is where we add in this case this is what's there the home warranty if it was a house at the nature ADA so you would have to transfer fee any documentation for you for that if you're paying your fee to a realtor and it's on top of the commission you're paying them like I'm a $400 as a buyer's agent fee I don't know why you do that but that's all the stuff that would be added in this particular section before I give the total amount which I already kind of gave you the total amount but I want to kind of let you know what would adjust if you're in a different state with different numbers so first things first is the taxes so in this specific example they charge in the impounds they charge three months of taxes which are about $50 a month so total yearly taxes on this property was what 600 to 700 dollars super cheap in your state if you're buying a house that's like three thousand dollars a year taxes well if if that adds if you divide that by 12 that's about $250 a month so you know instead of paying 151 they charge you 3 months it would be $750 so your closing costs would go up six to seven hundred dollars on top of that if your home insurance ends up being a little higher than this which in this case it's a little high here but if it ends a bit higher they charge you more upfront or your premium is going to be higher that's also going to boost your your your closing cost of it as well title fee's once again I told you it's a base awful usually 1% of the total transaction so if you're buying a more expensive house a title fees might be a little more so other than that this this is pretty standard it would only be adjusted if you know that the taxes like I said HOA was added your price points a lot higher your taxes are a lot higher your home insurance is a lot higher so that's why I always say it floats right so in this specific example it was about 66 56 with 85 cents however there was about two fees of down payment assistance so that could have been closer to $6,000 also there was a home warranty that was added on there usually in most cases we can get the seller to pay for them or you pay for you after the fact yes it is shocking to pay this additional five to six grand especially when you've saved so much for your down payment already as it is now you're thinking we'll have to come up with another 3% now well not really the good news about closing cost is you can get the seller to pay for your closing cost through what's called sellers concessions so if we can get the seller to pay your closing cost then you only have to worry about the down payment but like I always tell people you know you have to understand where they're coming from when they're giving you a closing cost so we're helping you pay the closing costs they're not just you know poof here seven grand Congrats it's coming out of their proceeds of what they're gonna make in their house and as long as you understand that then you can be smarter with your offer like sometimes people say well the house is worth two hundred thousand let's offer them 206 so they can give us six thousand dollars of closing costs back that way instead of having you come up with your down payment plus the closing cost they can cover the closing costs for you which like I described you know includes a lot of things that you should pay like your premium and your prepaids and all that all that stuff and have them pay that you just pay your down payment so if you are in a situation where it's a hot market sometimes you can't get them to pay all your closing cost that's why I said be very very specific with what do you think the closing costs are gonna be so if they're gonna be 5000 or 5,500 you know maybe you asked for 3,000 or 4,000 and you cover whatever is gonna be the rest so whatever the case may be I wish you the best of luck of getting your closing cost paid I hope this video helped you at least I'm like kind of shine a light on what the closing cost are if you guys have any questions whatsoever please leave a comment below and if you're looking for a realtor in the Phoenix Arizona area and vea who knows how to state area I'd love to be your guide my contact information can be found below and other than that guys that's all the time we have for today thank you so much for watching I appreciate your time have a wonderful [Music] [Music]

Channel: Javier Vidana

Views: 197,796

Keywords: Closing Costs, Sellers Concessions, Real Estate, Buying a House, Buying a home, buying real estate, buy a house, buy a home, first time home buyer, what are closing costs, what is closing costs, impound account, loan costs, down payment assistance, javier vidana, phoenix, arizona, az, how to buy a house, how to buy a home, cc

Id: Xl5ZapiRnEw

Length: 16min 9sec (969 seconds)

Published: Fri May 31 2019