Friday, June 19, 2009

Buying A House? What Are the Closing Costs?

A new website can help figure out what closing costs you or seller will face, as well as offer suggestions for local and regional title services, inspectors, insurers, and so forth. But don't forget you need to remember to add agent fees, if you use one, which should be negotiated ahead of time. See Closing.com.

4 comments:

Amy Bender Webb said...

User beware. I ran some numbers through this calculator at Closings.com and found pretty significant inaccuracies. On the costs of recording a deed/deed of trust, in particular, my result was off by thousands (using a 300K home purchase with 80% financing and 0 points as a scenario).

Generally, any online resource which can help a home buyer understand the true costs of a purchase transaction is helpful, but it is important to get good quality data. Your Realtor and/or your lender should be reviewing and explaining all these costs to you: The lender is obligated to provide a good faith estimate of closing costs and if your Realtor cannot explain every line on a sample HUD-1, he/she is not informed. If you are not using a Realtor or a lender, your closing agent/attorney can do the job. If your only resource is going to be online calculators, use several and compare the results.

As a real estate agent (and consumer), I am also, frankly, wary of online recommendations for services such as Title Company and Home Inspection Services. Yes, I do use Urban Spoon to pick out restaurants when I am out of town and rely on the advice of strangers, but this is a little more important than that! I would advise any home buyer to rely on a Realtor, lender, work colleague or neighbor for personal referral to an Inspector or Closing Agent before picking one off of a national website. I would like to have more information on the business model of this website, on what basis they make recommendations and on the financial arrangement between Closings.com and those they promote. I searched for a "Real Estate Broker" in the 22901 zip code and they came up with one listing: it was for an appraisal company based out of Richmond.....which tells me their data is highly suspect or they only feature paying customers without regards for validity.

Good idea...Questionable execution at best.

Cha said...

i like this site. it's like zillow or trulia in terms of offering addl info. i don't think most peoople will use it to complete a deal.

if somebody is frightened away from purchase because they don't have a margin of error for overspending by a few thousand bucks during an estimate, then they shouldn't be buying a house. just a thought.

Pavel said...

Interesting website. Someone had a good idea to showcase the service providers in one central spot - I just hope they don't only list those service providers who pay them a fee.

Here my 2 tips for having to bring less to the closing table:

1) Shop around for your title insurance. The coverage is often identical (and even issued by the same underwriter), but the cost to consumer can vary dramatically based on who the settlement agent is. Make a few phone calls and compare rates. I've seen buyers save $500-$700 dollars by making a few phone calls. Want to use a particular closing agent? See if they can match the price.

2) Close on your new home towards the end of the month. Sure... it all evens out, but your upfront prepaid interest costs will be a lot less. For example: if your interest on a loan is $30 per day. If you close at the beginning of the month: $30 X 30 = $900 of prepaid interest due at closing. If you close at the end of the month 2 X 30 = $60. (always allow at least 1 business day as a back up day and try to never schedule a Monday or Friday closing).

Real C'ville - The Bubble Blog said...

Pavel, Thanks for those tips. Useful.

Cha, re: "Margin of Error" -- this could be extended to if a buyer needs the up to $8K tax credit to cover closing costs and/or does not have 6 months set aside for mortgage payments or emergency fund, should they really be buying a house?

Amy, You've offered insight not only for buyers, but also for the sight. Wonder if they have feedback?