OK!!! OPEN HOUSE MANIA this weekend! 13 open houses! Several multiple days and times! We take open houses seriously! Come out and see some of our inventory. We will raffle an Artic Cooler just in time for spring! All registered guests will be entered! Great weekend to shop for a home!! If you have a home that you would like us to hold open, contact The Jessica Hargis Group to schedule a listing presentation. Selling or buying: We would love to work for you! 469-351-9516
Wednesday, February 1, 2017
Ah yes! Closing Costs…everyone has them but not everyone understands the way at which that final number is calculated. Well, it is my hope to help you understand what all constitutes that final number figured in your closing costs. Keep in mind, your lender should provide you with a document that is called a “Loan Estimate”. This Estimate will include all the charges, all the prepaid costs that you have to provide amounts for, your total down payment and should show you a final monthly installment amount. So, let’s dig in and answer a couple of questions that will determine the amount you need to bring to the table.
Question #1: Will you escrow your taxes?
Escrowing your property taxes means that you pay a monthly portion of your property tax and your mortgage company will pay them for you when they come due. For those people, like myself, that are not disciplined enough or just don’t want to think about it each month, this is a great option.
If you answer “yes”, then this will figure into your closing costs. When you close, you will pay the prorated amount of property tax from the day you close until the end of the year plus you will be responsible to put into escrow 2-3 months of advance payment to make sure your tax amount will cover your taxes due.
If you answer “no”, then you will need to prepare to make those payments to a savings account and be ready to pay when they are due. Your monthly payment will be smaller due to the not having to pay in for your monthly taxes.
Question #2: Hazard/Homeowners Insurance
Homeowners insurance is a personal preference. There are many options out there from State Farm, Farmer’s, Allstate to local brokers that shop for your best rate. Keep in mind, cheaper isn’t always less expensive but also get the most coverage you can get for the budget you have. With that in mind, your homeowner’s policy is an amount that will affect your closing costs. How?
- If you escrow…You will be responsible for one year’s prepayment plus 2-3 months in escrow. So, if your total policy is $1200/year, you will need $1500 for insurance at closing. That is $1200 for year 1 plus $100/mth for 3 months equaling $1500.
- If you don’t escrow…You need the proof of one year’s prepayment.
Your total closing costs are the sum of all of your title company fees, lender fees, property taxes, insurance and administration fees. Now this leads to the next statement…especially heard from First Time Homebuyers…
I have to pay HOW MUCH? I just put down Thousands of dollars and now have to pay more? Don’t worry, there are options for you.
- If possible, reduce your down payment and keep some of your down payment to cover the closing costs. This one is simple if you are going with a conventional loan.
- Ask your lender if you have any lender credits that they can help you with for your closing costs. This can usually be done by taking a little higher interest rate and rolling your closing costs into your loan. Keep in mind, you are financing your closing costs over 30 years. In reality, people stay in the home they purchase between 3-5 years.
- Gift funds. Maybe your parents or grandparents can help you with a gift that you can use toward your purchase. This will just have to be documented and your lender can instruct you on the process for receiving gift funds.
- Bonds/First Time Buyer Programs. These are great! Any good lender can take your situation and they should be able to know what programs are available to you. There are many different type of programs depending upon your personal situation. ASK YOUR LENDER!
Hopefully this little blog will help you along your way in purchasing your home. If you need any recommendations for a great lender, I have lenders that I can recommend and have worked with over the years. Homeownership is one of the best ways to acquire wealth for the long term in a person’s life. Should you need any help, please feel free to call/text me at 972-896-8046 or email at firstname.lastname@example.org
You can also search for your next dream home on my website at http://tommy.jessicahargis.com
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I look forward to working with you!