Home Buying in Fall River>Question Details

Adrienne, Renter in Snellville, GA

What expenses should we anticipate to incur when purchasing a home?

Asked by Adrienne, Snellville, GA Tue Jan 29, 2013

We are hoping to put an offer on a home within the next week, but I want to be sure we are prepared. If we are looking at a 140,000 home, how much should we anticipate to pay in closing costs, escrow, down payment, etc.? Is escrow mandatory?

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Hi Adrienne,
It is customary to put between $500 and $1000 down with your offer to purchase in my area. This could be different where you plan to buy. When you sign your purchase and sale it is typical to put 5 to 10% of the purchase price. This can be indicative of your commitment as a buyer. A seller likes to see a little "skin in game", as they say, so while big escrow isn't manadatory, it strengthens your offer.

You total down payment can vary depending on the type of loan you secure... FHA, MA Housing, etc. Likely as low as 3% to as high as you want! Your lender can tell you what you qualify for.

You can probably expect $4000 to $5000 in closing costs, but you can see if the seller will pay all or part of closing costs. But realize that this will affect the seller's proceeds, so your offer will probably be expected to offset this. So what this really means is that you are financing your closing costs.

What your closing cost actually will be only be answered by your lender or your attorney and at this stage it will only be an estimate. Once taxes and utilities as well as bank fees are all worked out (much closer to your closing) will you know the exact figure. But start with your lender to get their estimate. I believe they are expected to come within a certain percentage (part of "truth in lending"). Hope this helps!
1 vote Thank Flag Link Tue Jan 29, 2013
Good afternoon Adrienne,
If you are purchahasing a 140k home you should expect to put down anywhere from 3 to 20% or more depending on your means for down payment. There are manny ways to put down less and be more cost effective for you but your credit would have to be excellent to optimize some of these strategies. Also if you are putting down less than 20% than you will be required to escrow your taxes and insurance. If 20% or more down payment you may opt to waive the escrows.

As far as closing costs go, there shouldn't be any hidden costs or points paid by you. In manny cases I would credit the borrower enough to pay closing costs to go along with the lowest rates. It really depends on the program that would best fit your situation.

Closing costs should be around $3200 for that purchase price but if you add the homeowners insurance (that needs to be paid in full prior to closing or at closing), escrows (taxes and insurance) collected, and the mortgage interest collected (depending on when you close) it will be around $5,000. Also when you enter into a contract you should evaluate the mortgage rates. They just increased several times just last week so I woyuldn't be in a rush to lock in anything at this time. I would probably wait until the uncertainty of the second part of the fiscal cliff (budget spending) hits the market. The dow just went over 14,000 for the first time since 2007 and is probably due to come down in the next month or so.
If you would like to have a conversation and see how I can help you, feel free to contact me at loum@firsteastern.com or call me at 508-678-1166 x29.

Thanks,

Lou Matos
0 votes Thank Flag Link Sun Feb 3, 2013
Your lender is the best one to answer this question.
They should provide an estimate of closing costs.
They will know what type of loan you are getting and its criteria.

I used to say 3-5% of the cost of the house.
However, the best estimate includes things like how much is being put down, any points, legal fees beyond the lender's lawyer, ...


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0 votes Thank Flag Link Tue Jan 29, 2013
Typically Clossing cost will $5000 or less. A good way to save on this is to have the sellers pay closing cost. Your downpayment depends on the type of financing you have. And the type of property your buying. It could be anywhere from 0%-30% down. You should know your downpayment and type of financing before you make an offer. Escrow is not mandatory, but I would advise my sellers not to accept an offer where there was no escrow involved. Very easy to the buyers to walk away at anytime.
0 votes Thank Flag Link Tue Jan 29, 2013
Before making an offer or even looking at homes the first step is getting pre-quailified. Meet with a local and trusted loan officer who can go over your credit and financials and let you know what mortgage programs you may quailify for and what the costs are for each so you have a real place to start with actual numbers.
0 votes Thank Flag Link Tue Jan 29, 2013
Yes we have been pre-approved and I asked the lender these questions, but he threw all these terms at me and I just wanted someone to break it down for me. Thank you for the information
Flag Tue Jan 29, 2013
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