We’re talking from the buying side only – can be referred to as a percentage or a general flat fee if you prefer. “Fees” are not down payment, insurance, first month’s mortgage payment – as those all go toward the house, and are all things we would currently pay on our current house. But to buy a different primary residence, with a standard mortgage (30yr conventional no points), how much would we say are fees for title, administrative, etc? Maybe 1-3%? Is there an easy way or rule of thumb to figure this out? I’m having trouble nailing down a good number here.
How to explain to partner how much it cost “in closing fees” to buy a home?
byu/DongPolicia inRealEstate
Posted by DongPolicia
14 Comments
I’ve found the best way is to pull up a title company’s website, in your state, and look up to see if they have a net sheet you can fill out. That should give you a very close estimate.
It’s going to depend on your state and what loan program you use. Ask a local lender and as they are even halfway competent, they can work you up a fee estimate in about 30 seconds.
There’s no rule of thumb. Because part of your closing costs will be prepaids. You will need to prepay your tax and insurance escrow for one year, based on the estimated bills. After closing and actual bills come in, the amount of your escrow might go up or down. But the lender requires a cushion there. This is not a fee, it’s your money that will be used to pay your taxes and insurance. But it’s money you need to bring to closing. In a state with high taxes, or high insurance, your closing ‘costs’ will be a lot more than a low cost state.
That said lenders are required to tell you the costs for the loan you are applying for. And a title company can estimate their costs, for title insurance, as well as the services they provide (document prep, notary, recording etc).
If you have so much experience selling, why not just look at the settlement forms? It includes fees for the buyer as well.
Show them a HUD 1 settlement statement. All listed there
Reach out to the title company. I closed on my house in March and put $80k as downpayment. The rest of the out of pocket expenses came to about $11k but I paid for the closing costs and title, loan origination fees, etc. Those additional expenses came out to be about 3.9% of the sales price. I imagine your expenses would be a little lower.
So you’ve sold a lot of properties without buying?
At least 1%, but likely 1-2% depending on the area and price point
There is no percentage on the buy side. The escrow fee to close the file is the same at $100k as it is for $1M. There are too many flat fees involved that the percentage would be different at every price point.
Just walk them through a closing disclosure
Did you pay transfer tax or recording fees or any fees in your area or county, based on the purchase price or cost of the home? Did you buy a very high priced home with a larger mortgage and lower credit rating, so that your fees or costs to purchase might be higher than average?
3-5% might include all fees and costs. 1-3% might cover specifics you are referring to.
I always estimate 2%
It is usually slightly lower, but pretty close for a rule of thumb
Ask your lender for a net sheet. They should be able to show you an example of what to expect for closing costs!
I always tell my clients 2%-3% of the purchase price here in NJ. In NJ, clients usually need to bring at least 3 months of taxes to closing + escrow establishment. I put together a personalized screenshare video of my client’s Loan Estimate and Closing Disclosure and go through each line of the closing costs. I find it answers a lot of questions the borrowers have and they seem to like it.