Archive for February 12th, 2009

How much in closing costs do Seattle Home buyers need to pay?

12th February

2009

written by robgraham

So how much money will you need to bring to the closing table when you buy a home in Seattle? When we talk about closing costs, we are talking about a basket of charges that need to be paid to a variety of institutions for a home sale to close. For home buyers typical closing costs are as follows:

Before your eyes bulge out of your head, remember that any good buyer’s agent is going to negotiate on your behalf to get as much of this paid for by the seller as possible. Also, FHA and VA loans have some very generous options for allowing family to assist in the payment of many of these fees.

All the following approximations are based on a $400,000 Home Purchase

Down Payment: This number can vary depending on how much money you would like to put down on the home. FHA financing which is the most common type of home financing at the moment, allows you to purchase a home with 3.5% down. With a $400,000 home, that would equal:

3.5% down – $14,000

5% down – $20,000

10% down – $40,000

20% down – $80,000

Loan Origination: This is a fee you pay to the bank to allow you to borrow money to purchase your home. A typical loan origination fee is 1% of the loan amount.

$4,000

Title Insurance: The buyer needs to purchase a title insurance policy. The policy protects the bank in case an unforeseen challenge to your legal title emerges in the future. There is no way to avoid this one. The bank will require you to purchase the policy at closing.

$800

Escrow Fee: The escrow company is a neutral third party who handles the closing of the transaction, making sure everything happens on time and everyone gets paid what they are owed. This fee is typically split 50/50 between the buyer and the seller. The buyer can expect to pay:

$700

Funding Fee: This is a processing fee that the bank will charge for processing the loan.

$600

Appraisal Fee: The bank is going to send an appraiser out to the property to ensure that the home is worth at least what you are asking to borrow on the purchase of the home.

$500 – $600

Recording Fees: There are a few miscellaneous recording fees and other possible transfer fees associated with recording the title at the courthouse on the day of closing.

$100

Credit Report: The bank will check your credit score to make sure you are a good risk to loan to.

$20-$30

Inspection: This is paid at the time of the inspection not at closing but will cost you in the neighborhood of:

$400

Sewer Scope: A really good idea to add to the inspection if you are purchasing a single family home. It is also paid at the time of the scope not at closing.

$200

These numbers can vary somewhat based on the type of loan and if you choose to prepay some of the interest by purchasing points on your loan, etc. but the numbers at least offer a decent idea of what you can expect to pay or at least hope to get the seller to pay