This is a question I hear from all first time home buyers as well as many experienced buyers. First, know that Closing Costs will vary between states, counties, cities and even from one subdivision to another. For example, you will pay $2.60/$1,000 when you buy a home in Kansas; Missouri does not have that tax.
Here's a breakdown on estimates of costs that you will probably encounter in most residential real estate sales in and around the Kansas City Greater Metropolitan Area:
Title Fees: The title company checks to see that the title to the property is clear, offers title insurance, may hold monies in escrow, disburses monies at Closing, records the change of ownership with the county recorder, and in KS & MO conducts the Closing. Some other states involve attorneys in Closing real estate transactions.
Each title company has their own fee schedule but an average cost analysis for the Kansas City Greater Metropolitan Area leads me to expect around $500 for Closing on a property priced at $50,000 or less. I would expect a charge of around $800 for a property priced at $500,000. I would estimate around $1,300 for a million dollar property.
Tax Prorations: The Seller will pay the property tax up until the day of Closing. The Buyer will pay the property tax from the day of Closing until the end of the year. Property taxes may be as little as $400/year to $45,000+/year. Your agent can look that up for you once you find the home you want.
HOA Fees: If the home you are buying has a Home Owner's Association, the Seller will pay the HOA fees up until Closing; the Buyer pays the rest of the year. If the HOA, Co-Op, or Condo Association has a one-time move-in charge or transfer fee, the Buyer or the Seller can pay that depending upon what was agreed to in the Contract. HOA fees vary from one association to another. Golf course communities, lake communities, and gated communities may have a one-time membership buy-in charge in addition to other annual and/or monthly fees. HOA fees can be as little as $50/year up to $5,000+/month depending on the services provided.
If you are buying a home with cash, that should cover most or all of your Closing Costs. ♪♫
If you are financing part of your purchase with a mortgage, the lender fees will include:
Flood Certificate: This is a check with the FEMA to determine if the home you'll be buying is in a 100 year flood plain. The cost for this varies between about $9-15.
Credit Report: The lender will run a credit check on you before finalizing the loan. They may run a preliminary check when you first ask for a letter of Pre-Approval and then another deeper check once you have an accepted offer on a property. The cost may be between $15-30. This cost varies from lender to lender.
Inspections: As part of your due diligence, you will have a Whole House Inspection after your Offer To Purchase has been Accepted by the seller and before the lender starts your final approval processing. A Whole House Inspection may run between $380-650. The Lender will require a Wood Boring Insect Inspection (termites) which may run around $75-100. You might also like to have a Radon Inspection ($45-100), Septic System Inspection (free-$300), Chimney Inspection ($45-150), Structural Engineer Inspection (~$150-250), or other inspections that may be applicable to the particular property. The size of the house and lot may be a determining factor in the price charged. Inspection charges sometimes vary according to how you pay. If you pay cash at the time of the inspection, it may be less expensive than charging the inspection to Closing.
Appraisal Fee: The Lender will order an appraisal of the property before sending your loan to the Underwriter for Final Approval. This will cost somewhere around $300-550.
Survey: A survey will not be required on most urban properties in established neighborhoods. Lenders may require some sort of survey on commercial properties, raw land, or partially developed or improved land. A staked survey on a small to medium sized lot within city limits will probably run around $400-1,200. Boundary, topographical, deformation and other surveys are beyond the scope of this article and should be investigated by the buyer and their agent on an as needed basis.
Reserves & PrePaids: When taking out a mortgage loan, the Lender will require the Buyer to put some monies in a reserve fund to pay future taxes, MPI or PMI, and Hazard Insurance. This is to assure the Lender is covered should the Buyer default. This is not Homeowner's Insurance. Typically, the Lender requires 6-14 months of Hazard Insurance, 3-6 months of Property Tax, and 3-6 months of MPI/PMI.
Other Loan Costs: may include loan origination fees, loan closing fees, Underwriter fee, PMI premium, and VA Funding Fee. You may also elect to pay 'points'. Paying points means that you pay an amount up front in order to lower the interest rate on your mortgage. 1 point = 1% of the loan amount. [On $100,000 1 point = $1,000.] Some costs, depending on the type of mortgage loan you choose, can be rolled into the mortgage.
All tolled, you can figure 2-3% of the loan amount to come up with your Estimated Closing Costs. Your agent can/will/should give you an Estimated Buyer Costs Worksheet so you can plan ahead. Your Lender must give you a Good Faith Estimate when they provide you with your Letter of Pre-Approval. These are all Estimates. You will receive a HUD-1 Final Settlement Statement from the Title Company (or Lender) a day or three before Closing so you know exactly how much to bring with you to Closing. You and your agent will double check that it is correct before you sign the final documents.
Real Estate Broker Commissions: are usually paid by the Seller in our area. Exceptions would be homes bought at Auction, homes bought from For Sale By Owners, Buyers who keep an agent on retainer, and properties with offered co-op commissions that do not cover the minimum agreed upon in your Buyer's Agency Agreement. Please discuss these variances with your agent as there are ways of working out many different scenarios. A brokerage may also have an administrative fee per transaction ($210-365). This is paid by the client whether they are buying or selling.
*All of the Estimated Closing Cost numbers in this article are ESTIMATES only and should not be construed as final numbers.
Maria Morton,Realtor© Call 816-560-3758.mobile to connect
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*Information obtained from Heartland MLS is deemed reliable but not guaranteed. *This is an eclectic blog combining a little business with pleasure; please consult a licensed professional before making life altering decisions. ♪♫ Scan QR code for homes for sale mobile app:
Maria Morton of Better Homes & Gardens Real Estate is a licensed Real Estate Agent in KS & MO. 816-560-3758 Mobile 816-410-5499 Office 816-410-6302 eFax 435 Nichols Road Ste. 300 Kansas City, MO 64112 Maria Morton Copyright © 2008-2012