Closing Cost Fees and Cash Needed to Close

When you’re purchasing a new home, one of the first things that you’ll need to determine is “how much money will I need at closing?”

First of all, you’ll need to understand all of the required items that are to be paid at closing.  Generally, you can break down the cash to close into three different categories.  Lenders do have different fees, so you’ll want to work with a lender that can both close your loan on time AND has the lowest fees.  You can request an estimate by completing the form or CLICK HERE.

Down Payment – Most mortgage programs require a down payment.  For example, FHA requires a 3.5% down payment and Conventional mortgage programs require 3-5% down for primary residences.  In some cases, putting down more will help you get improved mortgage terms.  (Some loan programs require No Down Payment, such as VA mortgage programs and USDA mortgage programs.)

  • 3.5% Down on a 200k Purchase using an FHA Loan would be $7000.
  • 5% Down on a 200k Purchase using a Conventional Loan would be $10,000.

Closing Costs – closing costs are the fees paid to the lender, title company, appraiser, country, and any other service associated with closing your loan.   Some of the fees are regulated, such as title policy fees and county recording fees, so they will be the same regardless of where you close your loan.  On the other hand, some of the fees can vary from one lender to another.  It’s important to compare lender fees when determining which lender to use.

Typical lender fees include fees for processing, underwriting, tax certification, flood certificate, credit report, courier, etc.  Some lenders charge higher fees for processing and underwriting, so you’ll want to consider these into the overall picture when comparing interest offered.  Also, some lenders charge additional origination charges or points.

A lender in Texas with a low fees such as Josh Campbell will look similar to this – many lenders have much higher fees:

  • Processing $250
  • Underwriting $300
  • Courier $20
  • MERS $11.95

Other Charges

  • Appraisal – $400  (paid up front)
  • Tax Service – $75
  • Flood Certification – $11
  • Attorney Doc Prep (Required in Texas) – $150
Title Company Estimated Charges (based on a $200k purchase price)
  • Owners Title Policy (normally paid by seller) $1377
  • Lenders Title Policy $200
  • Escrow Closing Fee – $300
  • Attorney $50
  • Courier  $23.25
  • Guarantee Fee $2
  • Tax Cert  $39
Recording Fees
  • County Recording – $178 (estimate)
Survey (Required in Texas and some other states) – If the seller has a copy and nothing has changed with the property, then you can re-use their copy and eliminate this fee in most cases.
  • Survey Estimate $400
Prepaid Items – There are other items that will be required to at closing such as your first year’s insurance premium, setting up an escrow account for your property taxes and insurance (if the loan program requires it), prepaid interest depending on the day of the month that you close, and sometimes mortgage insurance premiums collected that are not being financed.
  • Home Owners Insurance Coverage for the First Year $1200 (estimated)
  • 3 months of Property Taxes and Insurance for your Escrow Account – $1500 (estimated)
  • 1 Month of Mortgage Insurance Premium not financed – $201 (based on current FHA premium on 200k purchase with 3.5% down)
  • Days of Interest Prepaid (this is because you don’t have a payment due on the first of the month immediately following your closing)  $200
SO, If you’re buying a $200k priced home in Texas, and the seller is paying the owners title policy and survey (very typical) and you paid the appraisal out of pocket up front (typical), then you would have:
  • 7k or 10k down payment (depending on if you use FHA or conventional financing),
  • $2010 closing costs (assuming you use Josh Campbell to assist you),
  • and about $3101 in prepaid items
  • Totaling approximately $12,111 or $15,111 needed at closing

 

 

**Keep in mind, there are several different options in how closing costs and prepaid items can be covered.  You can choose a seller credit or a lender credit to help bring down the cash needed to close.  Complete the form below, and we’ll contact you to help you work up a specific scenario based on your situation and we’ll discuss the different options available to help you decide which is the best way to proceed.

 

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Leave a Comment

You must be logged in to post a comment.