Please know that we are listening to you...You asked...So here are some answers to some frequently asked questions by buyers and sellers...
Q: How much are closing costs for sellers?
Here are the closing costs that sellers are typically responsible for:
- A closing fee, paid to the title company or attorney’s office where everyone meets to close on the home.
- Property Transfer Taxes on the home sale.
- A fee for an attorney, if the home seller has one.
- A fee for transferring the title to the new owner.
- Paying off your mortgage (if applicable)
Sellers typically pay real estate agents’ commissions 5% to 6% of the home’s sales price.
Q: How much are closing costs for buyers?
Most of the closing cost fees that buyers have to pay are associated with the mortgage.
Here are some of the fees a home buyer has to pay:
- A loan origination fee, which lenders charge for processing the paperwork for your loan.
- A fee for running your credit report.
- A fee for the underwriter, who assesses your credit worthiness.
- A fee for the appraisal of the home you hope to own to make sure its value matches the size of the loan you want.
- A fee for the home inspection, which checks the home for potential problems from cracks in the foundation to a leaky roof.
- A fee for a title search to unearth any liens on the property that could interfere with your ownership of it.
- A survey fee if it’s a single-family home or townhome (but not condos)
- Taxes on the money you’ve borrowed for your home loan
- In some sales such as shortsale or foreclosure property transfer taxes
If you’re paying cash for a property, there are still a few closing costs, but they are significantly less. Just think that you don't have to pay mortgage associated fees.
Q: How much is seller commission?
Sellers are often confused by the often-quoted ‘6% commission fee. Commission is split between the buyer’s and the seller’s brokerages (usually 50/50). After each brokerage takes their cut, the remaining amount goes to the agents. Real estate agents don’t receive salary, instead the fee received from their brokerage pays for the time agent spent marketing your home including fee to hire professional photographer, to list on Multiple Listing Service (MLS) and any applicable fees to advertise on various websites. If you house doesn’t sell, the agent doesn’t get reimbursed for the time spent or costs related to marketing your home.
Q: What is the difference between shortsale & foreclosure?
Q: Do I need to do an inspections on property I made an offer?
Most real estate buyers have little to no prior knowledge of, or expertise in, real estate and construction. Professional inspectors have the knowledge, skills, and experience to detect costly problems, so it is very important to include an inspection in the home buying process (particularly when buying a home built on improved land).
Most of the value of residential land comes from the house. A house with one or more severe structural, electrical, heating, or plumbing problems can cost tens of thousands of dollars or even more. Consequently, spending a few hundred dollars on an inspection is worth the investment.
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Q: What is Private Mortgage Insurance (PMI)?
PMI is a private morgage insurance policy that protects the lender from the risk of default and foreclosure, allowing buyers who are unable to make a significant down payment to obtain mortgage financing at affordable rates. It's a monthly fee, rolled into your mortgage payment that is required for all conforming, conventional loans that have down payments less than 20%. Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment. As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the sole beneficiary.
What is the cost of Private Mortgage Insurance (PMI)?
The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.
How can I avoid paying Private Mortgage Insurance (PMI)?
If you pay single-premium PMI upfront in a single lump sum, instead of monthly PMI payments. The premium can be paid in full at closing or financed in to the loan. Or you can avoid paying PMI by making a down payment that is at least 20% of the purchase price of your home.
What is lender-paid PMI (LPMI)?
With lender-paid PMI (LPMI) the cost of the PMI is included in the mortgage interest rate for the life of the loan. This can make a lower monthly mortgage payment, but you will end up paying more in interest over the life of the loan. And, unlike monthly PMI, you don't get to cancel.
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