Closing costs...

How Much Will You Need To Bring To The Real Estate Closing? 

Unfortunately all of the factors and figures to calculate the precise costs in a real estate closing may not be available until the very last moment, perhaps even when the parties are at the closing table.  And "shopping" for the lowest cost may not always be a good idea (see the article on this website concerning "Watered Down Title Searches").  But lenders are required to give borrowers a reasonably reliable "good faith estimate" (GFE) and the following discussion will help you calculate approximately what you will need to bring to a typical closing (in cash, certified funds or by wire transfer):

Essentially the buyer must pay the sales price; LESS credit for the deposit (that was already paid); LESS credit for the new loan amount (that the lender will pay); LESS credit for seller's portion of the property tax (i.e., for the part of the current year until the date of closing); PLUS the first year hazard insurance and flood insurance premiums (if applicable and unless already "Paid Outside of Closing" or "POC"); PLUS the lender's fees disclosed on the GFE (e.g., discount points, underwriting fees, credit report fees, appraisal fee, LESS what was already POC); PLUS per diem interest (on the new loan from the date of closing until an even month before the first monthly installment is payable); PLUS the "initial escrow" for insurance and taxes that the lender may require (e.g., if borrower will pay a portion of these items monthly with the principal and interest payment, so that lender will have collected enough to renew the hazard insurance policy a couple of months before it comes due); PLUS the closing agent's charges (e.g., for abstract, title exam, notary and other fees); PLUS the title insurance premium (this is a one-time fee and lender will "require" a lender's policy but not an "owner's" policy, that is strongly recommended – the State of Louisiana requires the buyer to sign an acknowledgement if the owner's coverage is declined); PLUS fees for recording buyer's documents (and the costs of preparation and recordation of other documents, e.g., a power of attorney for an absent buyer); PLUS the premium of any homeowner's warranty (if applicable, unless seller agreed to provide that); PLUS some miscellaneous charges (e.g., a courier fee to expedite transmittal of buyer's loan package to the lender); LESS any amount of the buyer's closing costs that the seller specifically agreed to pay in the purchase agreement, for example).  The following list might be helpful:

Due From Buyer(s): 

$____________ Price
$____________ LESS Loan amount
$____________ LESS Deposit
$____________ LESS Seller's pro-rata taxes
$____________ First year hazard premium
$____________ First year flood premium
$____________ Lender's fees, etc.
$____________ Lender's per diem interest
$____________ Hazard escrow
$____________ Flood escrow
$____________ Tax escrow
$____________ Abstract
$____________ Title exam
$____________ Notary fee
$____________ Other settlement fees
$____________ Title insurance premium
$____________ Recording services
$____________ Power of attorney
$____________ Other recording
$____________ Homeowner warranty
$____________ Other
$____________ Other
$____________ LESS seller reimburses

$____________ *Total Due From Buyer

[*estimated] 

Parties are required to bring Good Funds (usually a certified check or wire transfer) to closing.

How Much Will The Seller Get? 

The Seller will receive the sales price; LESS any deposit already received by Seller; LESS any amounts due to pay off "liens" and other charges against the property (e.g., the existing loan amount with interest, weed liens and past due condo association fees or assessments); LESS credit for Seller's portion of the property tax (i.e., for the part of the current year until the date of closing); LESS any Realtor commissions; LESS any new lender "mandated" fees (fees the new lender requires the Seller to pay); LESS settlement agent's nominal fees for checking the Seller's tax records and for the preparation, recordation and transmittal (sometimes by wire transfer or by express delivery) of funds and other documents for Seller (e.g., releases of liens against the property and a powers of attorney for an absent Sellers); LESS the premium of any homeowner's warranty Seller agreed to provide; LESS the cost of a wood infecting insect report (termite certificate), unless already POC ("Paid Outside of Closing"); LESS the cost of any repairs to be made by seller (unless POC); LESS any amount of the buyer's closing costs that the Seller specifically agreed to pay.  Here is a helpful list:

Payable To Seller(s):

$____________ Price
$____________ LESS mortgage payoff
$____________ LESS lien payoff
$____________ LESS Seller's prorata tax
$____________ LESS Realtors' commissions
$____________ LESS lender mandated fees
$____________ LESS recording services
$____________ LESS cancellation fees
$____________ LESS Power of attorney
$____________ LESS wire/courier fees
$____________ LESS other settlement fees
$____________ LESS homeowner warranty
$____________ LESS termite certificate
$____________ LESS repairs
$____________ LESS other
$____________ LESS other
$____________ LESS buyer's costs agreed

$____________ *Total Paid To Seller

[*estimated] 

Please Contact Us without obligation for information or a free cost estimate and we will keep your identity and inquiry confidential.  And, of course, your suggestions for improvement are always welcome.

Simply click the following link to email this office: bob@trust-counsel.com