The Funds Needed at Closing .. and How They are Figured

Reblogger Susan Haughton
Real Estate Agent with Long and Foster REALTORS (703) 470-4545 0225085927

This is a common question for almost every home buyer - what are closing costs and how are they calculated.  Below, Gene Mundt, an excellent mortgage professional in the Chicago area, answers these questions and more.  

Buying a home is about more than just looking at homes - it is critical to have the right mortgage person on your side, too. 

 

The Funds Needed at Closing .. and How They are Figured

 

     

     Most new mortgage clients I speak with have pretty basic concerns regarding their upcoming financing.  One of the questions I hear most often is ...

 
     How much money will I need at my Closing?
 
 
 Get a Quote!     A simple and quick answer might be provided by the following math equation:
 
 
Down Payment + Closing Costs/Pre-Paids 
                                   = 
                   Total Funds to Close
 
     
     But unfortunately, it's typically not that simple. Here's why ...  
 
     While the above equation is an appropriate starting point for buyers/borrowers, the actual amount of funds needed at the time of Closing often decreases during the time of mortgage processing.  
 
     How?  Often, during the processing of a mortgage or prior to Closing taking place, some items or fees get paid for.  
 
     Two (2) such fees are:
 
  1. The Appraisal Fee
  2. The Homeowner's Insurance First-year Premium

     

     Other items and services may also be accounted for AT CLOSING, in the form of Credits due from the Seller:  
 
     Examples of these include:
 
  • Real Estate Taxes (Due from the seller)
  • Earnest Money paid (Essentially, an advance towards the down payment, paid by Buyer)
  • The Seller's Portion of Title Insurance (in some States
 

     The amount you owe at the time of Closing can also fall should the following items be applied towards Closing Costs/Pre-paids:

 
  • Seller Credit
  • Lender Credit
     
     As you can see, the simple equation provided above becomes much more complicated as your mortgage progresses.  While the down payment portion of the equation typically remains pretty straightforward, the amount owed for additional fees can change ... or be decided upon ... as your mortgage process progresses.  
 
     Once those decisions are made, the monetary difference that remains is funded either by the Loan Amount requested or ... you guessed it ... via another equation:
 
Purchase Price - Loan Amount =  Down Payment
 
     Below you'll find examples of the Closing Costs you might encounter.  (Costs vary by State and/or Mortgage Lender.  Talk to me to receive definitive Costs for your Chicagoland/IL/WI financing.)     

     
     Examples of Closing Costs followed by the Entity charging those fees :

 Document Checklist
  • Appraisal Fee - Borrower (Pre-Pays Lender @ Application)
  • Real Estate Transfer Taxes - Per RE Contract (IF paid) (Paid @ Closing)
  • Escrow/Settlement Fee - Title Company (Paid @ Closing)
  • Title Insurance - Title Company (Paid @ Closing) 
  • Recording Fees (Mortgage, Deed) - Title Company - (Paid @ Closing)
  • Attorney Fees (In certain States) - Attorney (Paid @ Closing)
  • Flood Certification Fee - Lender (Paid @ Closing)
  • Origination Fee - Lender  (Paid @ Closing)
  • Credit Report Fee - Lender (Paid @ Closing)
  • Processing Fee - Lender  (Paid @ Closing)
  • Underwriting Fee - Lender  (Paid @ Closing)
  • Discount Points (IF paid) - Lender  (Paid @ Closing)     

 

     Pre-Paid Items include:
 
  • 1st Year Homeowners Insurance Premium
  • Impounds for Real Estate Taxes and Insurance
  • Homeowners Association Dues (IF applicable)
  • Interest Charges (Varies with Closing Date)
  • Mortgage Insurance (IF applicable)

 

     Once again, the lists above aren't an all-inclusive list of what you as a Buyer/Borrower might encounter in your individual transaction.  Local or state practices may add or subtract to the costs presented here.      
 
     But the lists make one point very clear:  Borrowers need to be aware that there will be extra costs that accompany buying their home beyond their down payment and future monthly mortgage payments.  And they need to plan for them.
 
     There are several different ways to do that. That's where I (your Mortgage Originator) come in. 
 
     Prior to entering into a Real Estate Contract:  Contact me.  We will discuss all options available to you.  That way you know and thoroughly understand the costs needed when you buy and finance a home ... and you can make the wisest decisions moving forward.  
 
     No surprises encountered.  Just a stress-free and successful home buying and Closing experience ...
 



    
     * Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
 

 

Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed
 
American Portfolio Mortgage Corp.
nmls #175656
 
Direct: 815.524.2280
Cell or Text: 708.921.6331
eFax: 815.524.2281
 

  

 Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   

  Zillow Acct. of Gene Mundt, Mortgage Lender     Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender  

    

 

Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                   IL Lic. #0006220  -  WI License                                                                                                     

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

Email Me .. to be added to my Mortgage & Real Estate Newsletter

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
Virginia King George County King George

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,778,216
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

Great reblog, Susan... so many buyers seem to "forget" that there is a cost associated with buying a home and what those costs could be.

Jan 07, 2017 10:03 AM #1
Rainmaker
1,151,155
Jeremy K. Frost
Keller Williams Realty - Dripping Springs, TX
Associate Broker, CNE, CRS, ePro, PSA

Thanks for sharing this with everyone. Best of luck in 2017!

Jan 07, 2017 10:06 AM #2
Rainmaker
49,250
Missy Adams
The Adams Home Team - KW Luxury Homes - Nashua, NH
The Adams Home Team - Dedicated to Your Needs

While all states are different in some ways, this is a great analysis. Thanks for sharing..!

Jan 07, 2017 10:12 AM #3
Rainmaker
1,277,253
Yolanda Cordova-Gilbert
C&G Consulting - Katy, TX
C&G Real Estate Consulting

Susan,

 Excellent re-blog and I hope you have a wonderful weekend!

Jan 07, 2017 02:55 PM #4
Rainmaker
1,400,183
Patricia Feager
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

This is a great re-blog. Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi has a way to take us through the maze in language that is very understandable.

This was an excellent choice!

Jan 08, 2017 07:30 AM #5
Rainmaker
2,164,911
Rebecca Gaujot
RE/MAX Vision Quest - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Susan, missed this post. Gene did a great job explaining funds needed at closing.

Jan 08, 2017 04:57 PM #6
Rainmaker
3,880,256
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

This is a great selection for a reblog and excellent advice to share.

Jan 08, 2017 05:47 PM #7
Rainmaker
796,069
Sheila Newton Team -- Anderson & Greenville SC Real Estate
Berkshire Hathaway HomeServices - C. Dan Joyner - Anderson, SC
27 years experience -Residential Real Estate Sales

Susan - thanks for the reblog.. i missed this one.. hard to get them all :)

great advice for clients!

Jan 08, 2017 06:00 PM #8
Ambassador
2,137,158
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

I did see this one the first time around. Gene has some excellent information in this post. Great choice for a re blog. 

Jan 09, 2017 12:28 PM #9
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
885,775

Susan Haughton

Susan & Mindy Team...Honesty. Integrity. Results.
Are You Ready to Make a Move? Call me!
*
*
*
*
Spam prevention