“How Much Are Closing Costs?” is the second of three videos for first time homebuyers, or anyone who needs a refresher in how much down payment money they will need to buy a house.
In this short video, I talk about what the closing costs are and how much they can add up to be.
“In addition to cash for down payment, you’ll need some cash for closing costs. There’s three types of closing costs for buyers-lender fees, prepaids and misc costs.
First, the lender is going to charge you an origination fee, typically 1% of the purchase price of the home.
Second, the lender is going to set up what’s called an escrow account for you at closing. Every month you’ll be paying a little bit toward your homeowners insurance and property tax so that when the bills come due the lender camn pay them for you. In order to make sure there is enough in the account, they’re going to grab some cash at closing to get that account stocked up for you.
Third, misc fees can include recording fees for your new mortgage and deed, maybe for a home inspection or a home warranty.
Added up, these fees add up to be between 2.25% and 2.5% of the purchase price.
So on a $150,000 house it could be about $3,300 to $3,700, give or take.
Now I can hear someone saying “boy I don’t have enough money for downpayment how am I going to possibly come up with money for closing costs too, I guess I just won’t ever be able to buy a house.” And that’s not true. There’s actually a really terrific loan program out there that gives homebuyers who qualify downpayment and closing cost assistance. We’re going to talk more about that in the next video.”
by Albuquerque Real Estate Agent Rich Cederberg. Please call or text me (505) 803-5012.