Closing Costs Estimates Before Offer

I wanted to share with you future home buyers out there a bit of insight, okay, a “Tip Of The Day”.

If you are planning on making an offer to purchase a home, to include a credit from the seller for closing costs, make sure you understand if that credit is going to cover your recurring closing costs as well, and items that must be prepaid due to the date you are closing, such as taxes, insurance, HOA pro-rates, etc.

While your Realtor may very well provide you with an estimated picture as to how much your closing costs will be, they may not be taking into consideration, or going down the path of estimating your recurring closing costs. The reason why that amount is often left alone, is because it can very so much based on different factors (ie. when the escrow will actually close).

My suggestion is to make sure to tally up an estimate for both closing costs and recurring closing costs prior to making an offer. To do this, get together with your lender and ask for an estimated HUD1, tell them how much the property is, how much you are putting down, determine a loan product, and estimate the most likely closing date. He or she should easily be able to tell you how much your entire closing costs will be to include non-recurring and recurring closing costs. If you feel you can strike a deal with both types of closing costs being paid by the seller, the go for it! Otherwise if you can only get your regular non-recurring closing costs covered, you will have to come out of pocket on certain prepaid prorates for items such as interest, property taxes, HOA fees, etc.

You should be working with a Realtor who can give you an “estimate” of these costs. But the lender should be the one to give you the superseding estimate that you are going off of since the lender and you will deterime a large portion of your closing costs, such as any points paid in order to lower your interest rate.

An excellent resource for examples on closing costs, is a Realtor colleague of mine out in Arizona. His website has an excellent web page devoted to this subject. Take a look, and get an idea what an Estimated/Final HUD1 closing cost statement looks like.

Remember…when buying or selling Santa Clarita real estate, call me 1st.

Robert Mickalson, Realtor

Vintage Sotheby’s International Realty

661.219.2260 or 661.373.2374

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