You finally saved some money and have the cash together for a down payment on a house, congratulations… But is that all there is? What about closing costs when buying a house in Roseburg? Understanding the costs involved in buying a house is important before making offers.
Saving money is hard and there is a lot of thought and emotion that goes into preparing, finding, and buying a house. Once you have completed the long journey of house hunting and negotiating, it’s time to get the deal done and get your keys, right?
One aspect of buying a house that is oftentimes overlooked is the closing costs. Closing costs and prepaid items can be an unpleasant and expensive surprise if you’re not informed and unprepared.
Understanding and budgeting for closing costs can make that final stretch of the process far more manageable and much less unpleasant. Hopefully, you’re working with a knowledgeable real estate agent who is able to help you understand all the ins and outs of purchasing a home…
So check out these 5 things you should know about closing costs when buying a house in Roseburg.
1. What Closing Costs Are and How Much Are They
So, let’s take a look at both, what are closing costs… and how much are closing costs when buying a house in Roseburg.
Closing costs include expenses for different services that are involved in finalizing your mortgage as well as costs associated with finalizing the real estate deal. That means some of the costs are property related, for example, for the appraisal and for searching and clearing the title. We refer to some of these fees as prepaid items.
Other closing costs are mortgage-related, for example, for the cost of originating and underwriting the loan and for attorney services in certain instances. These costs are buyer fees paid at the time of closing. Buyers will typically wire funds to the title company, bring in a cashier’s check, or maybe there’s a seller credit.
On average, closing costs run about 2% to 6% of the mortgage loan amount, depending on the buyer’s profile and the type of loan they are obtaining. So, if the loan amount for your house is $350,000, for example, when buying a house, the closing costs would range from $7,000 to $21,000.
Yeah, I know, that’s a chunk of change, but in a normal real estate market we can oftentimes get the seller to credit the buyer for some of these fees. Keep in mind, though, that usually happens with less price negotiation… so it’s price or terms.
Another option to lower the costs involved in buying a house in Roseburg is to apply for a no-cost or fee mortgage through Keller Mortgage. This is an exclusive loan for Keller Williams clients… so it might be a good option if you’re buying a Keller Williams Realty listing or working with a Keller Williams Realty buyer’s agent… either one.
If not getting a no-cost loan, the best way to handle closing costs is to pay them upfront and not finance them in way of a seller credit. Remember, it’s usually a tad higher selling price if you’re getting a seller credit… In my opinion, it’s not a wise investment to finance your closing costs over the life of your loan, unless there is no other option.
But, if you’re like many Roseburg OR homebuyers, you might find yourself a little short on cash after paying the down payment. Maybe coming up with this extra cash isn’t a doable thing for you. In that case, you’ll want to ask for a seller credit (in the offer) and have the cost rolled into the loan or apply for a no-cost mortgage.
2. Property-Related Fees
So, we looked at what closing costs are when buying a house in Roseburg… now let’s look at the other property-related fees involved that are wrapped up with the closing costs associated with buying a house.
These are the other fees involved in buying a house… often paid prior to closing… referred to as prepaid fees or “prepaids”…
- Appraisal fee – Covers the work of a trained and licensed appraiser who determines the home’s actual worth.
- Home Inspection fee – Similarly covers the work of a professional inspector who evaluates the home’s condition to make sure there are no major problems or issues.
- Title search – A fee paid to the title company for searching property records to ensure aren’t any issues such as a lien with the title.
- Lenders’ Title insurance – Insurance purchased by the buyer. This is often required by the lender. This is different than the Owners’ Title Insurance policy which is paid by the seller to cover any title issues that might be discovered after the sale.
- Property taxes – A frequent closing surprise, if not informed by their agent is the real estate property taxes. These are usually prorated as of the date of closing. Our Douglas County tax year runs from July to July. Other states may be different and will vary. (You can contact an Roseburg agent at 541-643-1131 to find out what you’ll be facing with respect to property taxes in your market.)
- Hazard Insurance – You will likely need to prepay your first year’s worth of hazard insurance… you can’t close without insurance.
3. Mortgage-Related Fees
In addition to the above-mentioned fees, when buying a house in Roseburg OR, there are also other costs that have to do with the mortgage. These closing costs include . . .
- Credit-report fee – The cost charged by your lender for checking your credit report and score.
- Origination fee – Fee charged by the lender for creating the mortgage loan (one of the ways lenders make money).
- Application fee – The fee charged by some lenders for processing your loan.
- Underwriting fee – Basically an administrative/processing fee to cover the cost of confirming your financial qualifications and eligibility for the loan.
- Points – An optional way for you to lower your interest rate is by paying another charge known as mortgage or discount points.
Got questions about these mortgage-related fees? Contact me here.
4. Who Pays Closing Costs
You might be feeling a tad bit overwhelmed by all the closing costs and fees associated with buying a house at this moment… and you might be asking yourself if you can really afford to buy a home. So who pays… and who is allowed to pay for the closing costs?
Typically, the buyer is responsible for paying the bulk of the closing costs, but the seller also pays some of them. Buyers can also ask the seller to pay all or a portion of the closing costs. In addition, a family member of the buyer might also be able to gift a portion of the closing costs and fees to the buyer (ask your lender what is allowed).
In most cases, buyers pay their portion of the closing costs out of pocket. I know it’s not easy to save money, but if you’re planning on buying a house, you’ll want to save as much as you can. And, as I mentioned, there are other creative ways to pay the buyer’s closing costs when coming up with the cash is just not possible.
Just to recap real quick… buyer’s side closing costs include all or some of the following fees including attorney fees, appraisal and inspection fees, and credit reporting and underwriting fees, as well as fees for the title search, title insurance, prepaid interest, prorated property taxes, and homeowners insurance.
Home Sellers, on the other hand, typically pay a much smaller portion towards closing costs because they don’t have all the lender fees involved in the transaction. They do, however, foot the bill for the real estate commission. Seller’s closing costs are almost always paid at the close of escrow from the proceeds of the purchase price rather than being paid upfront.
5. How To Determine And Budget For Closing Costs
So if you’re buying a house in Roseburg, you likely want to know how to determine what your closing costs will be and how to budget for them effectively. You can call, text, or direct message me anytime to help you with this one… or…
After you apply for a mortgage, your lender will provide you with a loan estimate document (usually within three days of application). This document outlines the closing costs and includes other important details.
And then again, just before closing… usually the week of closing, your lender will provide you with a closing disclosure document (CD). You should carefully review these documents to get an accurate idea of what your closing costs will be at the closing table. There is a mandatory 3 day waiting period before you can close – after receiving and acknowledging the CD.
When it comes to budgeting for closing costs, I recommend that you budget for the high end of the costs, about 5% of the purchase price. It will probably be less, but it’s good to be prepared. But then again, don’t let that stop you if you only have enough to pay for your down payment. I’m happy to discuss your other options to cover the closing costs.
The Assistance You Need When Buying a House
The upshot of all this is that closing costs can amount to a sizable chunk of money. The trick then is to be prepared, be aware of what costs you’ll be facing at closing, and know the options available to you.
And that’s why it’s so important to work closely with an experienced Roseburg agent. If you’re planning on buying a house in Roseburg, I’d love to hear from you. Choose to work with a top real estate agent in Roseburg… contact me at 541-643-1131 to get started.