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Buyer's Closing Costs and Prepaids

By
Real Estate Agent with Ultra Real Estate Dallas Fort Worth

 

Most potential buyers do not take into consideration the Closing Costs and Prepaids required to purchase a home (or even understand what those are to do so).  In additional to the required down payment (see below), there are Closing Costs and the Prepaids that must be taken in consideration of our pocket costs.

 

 

Closing Costs:

 

Closing costs are the many companies that are involved in the transaction: Appraisal, Survey (can use the sellers’ with some exceptions), Tax Certifications, Underwriting, Processing, Wire Fees, Title Fees, Recording Fees, RMCR credit fees, Recording Fees, Closing Attorney, Closing Docs Attorney (who draws your closing docs), etc.   

 

Pre-paids:

 

Typically consist of 1 year of insurance +3 months in reserve in insurance + 3 months of reserve in taxes.  Borrowers will choose their own insurance company (Lenders do not choose it). 

 

Quick Calculation (not exact but will be close)

  • $100,000 sales price- use (for closing cost and prepaids) $6000.
  • For each $1000 up or down add or subtract $30 ($101,000 would be $6030; $99,000 would be $5970). 
  • Add the down payment required/ requested

 

So if a $200,000 Sales Price FHA (3.5% down), then $6000 + $3000 + $7000 Downpayment = $16,000 approximately needed. 

 

This formula is only used as a guide for home buyers. Whenever in doubt, you should always ask your lender for  information and clarification. 

 

If you are looking to sell or purchase real estate in Dallas Fort Worth area please call me at 469-371-2899. I'm honored to be able to assist you!

 

 

 

Comments(3)

Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Hi Susie, good information for buyers especially first-time buyers.

Oct 18, 2018 07:10 PM
Susie Kay
Ultra Real Estate Dallas Fort Worth - Plano, TX
North Dallas Specialist

Thank you Rebecca Gaujot, Realtor®  for your comment and for dropping by!

Oct 20, 2018 01:18 PM
Steffy Hristova
HomeSmart Elite Group Tempe AZ Tel: 602.710.8161 - Tempe, AZ
Tempe AZ Realtor - Your Home Close to Your Work!

Susie, great reminder for Buyers about the extra money needed for closing. Depending on the market, these can be negotiable items for the Buyers, and the seller can contribute towards them.

Feb 07, 2019 06:58 PM