One of the top questions I get as a real estate agent is “How much are closing cost for a home?”. What you need to understand is how closing cost work. Very few home buyers really understand how costing cost actually works and what they REALLY need to know about them.
Transcription
Hi everyone. You Tampa Bay real estate expert and realtor Lance Mohr and in this video, I want to go over what are Closing Costs, how do they work, and what you need to know about them when you're buying a home.
Let’s talk a little bit about closing costs. The reason why I wanted to do this video, is because we're really good real estate market and I know a lot of realtors really getting complacent in the market more on the listing side than the buyers. A lot of lenders are really getting complacent. They’re just telling people to go to their website, they're having to fill out an application and there's giving the good faith estimate that has their closing costs on. It’s just not really explaining everything. First off, before I get into the closing costs, I just want to let you know is you’ve probably watched these videos. I'm not super big fan of big banks, especially like Bank of America and the reason is, that in my experience from being in lending and being in real estate over 20 years. They have a lot of internal problems and a lot of them, I don’t want to say all of them. A lot of them have a hard time closing deals on time and the loan officers because they are just sitting in the office they are just waiting for business in a lot of cases, again not all of them. I would rather go after, someone who's actually hunting. In other words, someone who’s after actually on the street going for business like a mortgage banker or a broker. I want to let you know, the difference between a bank like a Bank of America, Wells Fargo and a broker when you're looking at the different closing costs, is banks lend their own money. They have their underwriters, processors, usually closing departments. A lot of these in-house so their interest rates are going to be a little higher because they are putting rates out there retail regular pricing but their closing costs are going to be less.
When you go over here to a mortgage broker they get the price in at wholesale. So the interest rate may be a little Lower. When I say lower, I’m not talking a quarter or a half a half percent. It could be anywhere from an eighth of a percent to maybe a quarter percent because remember all banks get their money of the same place. But their closing costs are going to be higher because they have to charge money for underwriting fee, processing fee, closing fee etc. So just keep that in mind when you're looking at your closing costs. When I say closing costs I mean the cost that it actually takes to close a loan. I break it into two different two different types of cost. Number one is the reoccurring closing costs and number two is the non-reoccurring closing costs.
Let’s start off with non-reoccurring closing costs. These are costs that actually going to cost you to get the loan. Stuff like the loan origination fee, a processing fee, an underwriting fee, a document preparation fee, a closing fee, a survey, an appraisal and on a credit report. Now, this is obviously you're getting a loan. The credit report and you’re going to have a difference. In Florida, you’re going to have intangible taxes that to go to the state and other state taxes that are going to go to the state. These are going to costs you money. I just want to give a side note right here. If you are buying a new home and this is very important to know. Builders are not going to tell you this, your realtor may not tell you this but if you're buying a new home pretty much any state out there there's going to be two additional cost. One of them, there's going to be,transfer tax fees. We call them deed stamps in Florida and in Florida there’s $7 per thousand because the builder does not pay those. The other thing they don't pay title insurance fees. The owner’s title insurance policy, builders don’t pay that. That’s $5 per thousand plus $75. Just keep that in mind if you are buying a new home, you’re going to have to pay those fees as well and the builders going to give you incentive money to pay those. Anyhow, those are what’s called one-time fees. They are non-reoccurring so it’s not going to reoccur. You’re going to pay them one-time that's what’s it will cost you for getting the loan.
The other one, your reoccurring fees are going to be like your one year hazard insurance. If you get hazard insurance. Let’s just say, figuratively it’s a thousand dollars a year you're going to get hazard insurance. That's reoccurring, you’re going to pay it upfront and then you're going to make the payment your principal interest, taxes and insurance the I, PITI is insurance you’re going to be paying that every month. So when you get to the next year well that money is in there to be paid to the insurance company. You’re also going to have reserves in there. It is a formula but it's about two and a half to three months of reserves. Some people say reserve, some people call it escrows. What that is for, in case you default on the loan they have a little cushion in there. These are what’s called the reoccurring fees. It’s important and especially I go over this bit more in detail in one of my refinance videos because it’s very important to know. It’s good to understand closing costs, reoccurring fees, non-reoccurring fees and what they are. Especially for buying with the builder, you need to understand you not want to find out at the title company that the builders not going to pay your owner's title policy for your doc stamps.
I hope this was helpful. If it was or if it wasn’t, leave me a comment below. Let me know what you think. Are there any videos you would like me to do anything any questions you or have anything? I appreciate you watching my videos. If you have any questions or you need an agent in the Tampa Bay area reach out to me (813-317-4009). Have a nice day and I Wish you the best of luck.
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