Surprise! It May Cost    

More Than You Think!

By Sheila Dunigan, Realtor

Keller-Williams Real Estate

 

There are many happy surprises in life, but then there are those shockers that can be very unpleasant.   One of the least happy surprises comes when you are buying a new home and suddenly discover that the house you want will cost more than you thought or more than you can afford to pay.   

 

In every case, being prepared is one sure way to avoid most of life’s unpleasant surprises, and it is no different with buying a home.   That is why when you are getting ready to search for your new home there are things you need to consider right up front:

 

1.   Find a reputable lender and get yourself pre-approved.  If you do not know a lender you should talk with a Realtor who you trust.   Realtors deal with lots of different lenders.   They can tell you about several who they have had success working with. Your lender will pre-approve you and that will let you know the price range in which it makes sense for you to shop.

 

2.   Next use a title company that has a good reputation.   Lenders and title companies work hand-in-hand to get real estate transactions to the closing table and closings completed successfully without any unpleasant surprises.  When you find the home of your dreams, you will want to move quickly.  Once again, when it comes to pulling off a smooth, surprise-free closing, your Realtor’s help in choosing a reputable title company can be invaluable.

 

3.   Finally, don’t be surprised by closing costs.  Some buyers, especially first timers, have trouble understanding the costs involved in buying a new home.   This is where the surprise element can come into the picture at the very last minute.   A trained, experienced Realtor is the key to avoiding unpleasant surprises when it comes to closing costs.

 

On average the cost of obtaining a loan and buying a home will run between three and five percent of the total cost of the deal.   Most of these are fees the lending institution charges.   Closing costs can include a loan origination fee, appraisal fee, processing fee, credit report, etc. The charge depends on the type of loan you are getting (FHA, Conventional, VA or Rural Development).   Sometimes the lender will even require a year of homeowners insurance to be paid in advance at the closing.  

Other things you will want to know about before you get to the closing table are:

escrow deposits for homeowners, and who pays what portion of the property taxes for the current year.    

 

Of course the title company will charge for the title examination, the closing, recording the mortgage and title insurance.   There can also be miscellaneous charges for things such as the termite certificate, your home inspection fees, and home warranty fees.  

 

During the negotiation phase you will have the opportunity to ask the seller to help pay all or part of the closing costs.   They may agree to pay all, part or none.   You need to be prepared for any of those responses.   And you should take that into consideration when setting your offering price.   You can’t wait until you are at the closing table to try and figure out who pays what.   Remember, the key to a smooth closing is ‘NO SURPRISES.’

 

So, now that you understand the need to select your Realtor, your lender and your title company carefully, are you ready for some "Happy House Hunting?"

 

Information on closings was supplied by Laurie Kitchen of Commerce Title-Zachary.