What Closing Costs to Expect if You're a First-Time Home Buyer

What Closing Costs to Expect if 
You're a First-Time Home Buyer
 
 


     There's a lot of things to learn and know when hoping to become a First-Time Home Buyer.  It can all seem a bit overwhelming ...

     Closing Costs:  Closing Costs are one of the most important things you must know as part of your upcoming transaction and financing.  

     And while everyone's transaction may have costs specific to it (or the locale of the property), there are some costs that are pretty much basic and universal to every transaction.  

     Below is a comprehensive list of those costs charged to most Home Buyers as part of obtaining a mortgage loan.  First-Time Home Buyers should count on these basic costs as part of their fee faced at the consummation of their transaction.

     Those Closing Costs are:

  • Lender Application Fee .. OR .. Appraisal Fee
  • Appraisal Fee (Paid @ Application) If not Application Fee
  • Credit Report (Paid @ Application OR @ Closing)
  • Tax Service Fee
  • Flood Certification
  • Home Inspection (Paid @ time of Inspection)
  • Lender's Origination Fee (Paid@t Closing)
  • Title Fees & Title Insurance (Paid @ Closing
  • First Year's Homeowners Insurance Premium (Paid @ Closing or immediately prior to)
  • Possible Cost:  Homeowner's Association Documents & Questionnaire (If Applicable)
  • Recording Fees (Paid @ Closing)
  • Transfer Taxes (These vary by City, County, State ... and by terms of Contract)  Often paid by Seller.
  • Attorney Fee (Common in Illinois.  Paid @ or after Closing)
     
     The sum total of these items:  The total can be between $4,500 and $6,000, depending on the Vendors used to complete the Services ... and what the Lender charges.  
 
     Please Note:  These costs are in addition to any down payment a Buyer may have to produce to purchase their home.  In some states, portions of these costs are "offset, or credited by the seller", such as Title Fees and Real Estate Tax Prorations.
     
 
     It's important to point out:  If these costs are known in advance of negotiating a price and Contract, a Home Buyer can request a Closing Cost Credit from the Seller of the property.  
 
     Buyers may ask:  That part, or all, of these costs be paid as a credit at Closing to the Home Buyer, (Subject To Guidelines).
 
     The need for Seller-Paid Closing Costs should be determined with your loan officer at the time of Pre-Approval ... not after the offer is made to purchase a home.  
 
     Asking the Seller to contribute to these costs upfront is usually the best course of action.  In these cases, Home Buyers can cover their Closing Costs in part, or entirely, by the Seller, as per the negotiated Contract.
 
     Once again:  The above info and methods are common to the Chicagoland/Illinois area.  Other areas/states may have varying costs/amounts due to local customs and practices.
 
     Bottomline:  It's wise to have a conversation regarding credit, finances, down payment needs, and possible Closing Costs with a Mortgage Lender well in advance of beginning your home search.  
     That way you are educated, prepared, and well-positioned financially for your home purchase and financing ...
 
 
     *  Hoping to buy in New Lenox, Will County, or elsewhere in the greater Chicagoland area?  Contact Me! I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
 
Gene Mundt
Mortgage Lender  -  NMLS #216987  -  IL Lic. #0006220  -  WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656
 
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281
 
 

  

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

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. 

 

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Comments

Good morning Gene. Outstanding job with your post. Your clients are very fortunate to be working with you, you educate them very well.

Make it a great weekend!

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 3 years ago

Gene, surprising how many people have no clue! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker - Retired (Wayne M Martin) over 3 years ago

Most folks have a clue today.

They see ads touting "NO DOWN PAYMENT".  That doesn't mean no money needed to buy.

First time buyer program are certainly helpful.  Fact is, those closing costs don't go away.  They are just shifted to the seller or sometimes the county/state. 

Closing costs are often a valuable source of revenue for counties or states. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 3 years ago

Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com - Well done. Excellent list. Buyers need to maintain the RESPA for when they prepare their income tax return.

Cheers,

Tom

Posted by Thomas F. Scanlon, CPA, CFP (Borgida & Company P. C., CPA's) over 3 years ago

Great post and good information.  This is why it is  so important for buyers to talk to a lender before starting the home search.  If closing costs are needed they can often be asked for as part of the purchase but as Realtors we need to understand the needs of the buyer to we can structure the most effective purchase offer.

Posted by Shirley Coomer, Realtor, Keller Williams Realty, Phoenix Az (Keller Williams Realty Sonoran Living) over 3 years ago

Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com this subject is a need to know. Keep these reminders coming in. Good posting here

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 3 years ago

Great post, Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com .  I never want my clients to be surprised at closing and, YES, knowing ahead of time helps tremendously with negotiations!  Thanks for the post.

Posted by Carol Williams, "Customized Mentoring & Marketing Services" (U.S.: I specialize in helping agents who have been in the business 2 years or less create a thriving business.) over 3 years ago

Another great post to add to my Pinterest board on lending.  Thanks Gene, you always share great info for our clients.

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) over 3 years ago

Thank you, Joe Petrowsky ... I appreciate your thumbs up and support ...

Wayne Martin ... exactly why you and I are here!  To educate ...

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

The ads .. terminology ... changing industry.  It all can be very confusing to buyers.  Especially those buying for the first time, Lenn Harley.  They need professionals with your experience and expertise to guide them and help them sort it out, no doubt about it.  And it's true.  Those fees don't disappear .. they appear in another form, hopefully for them ... in a more palatable form ...

Gene 

 

 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Thomas F. Scanlon ... buyers do need to maintain their records and keep their documentation.  And those closing documents will soon be called something new ... again ...

Shirley Coomer ... you touch upon a very important subject.  The communication needed between lender and agent PRIOR to the contract being written and signed.  So many problems can be avoided, when this occurs.  Great point .. thank you for raising it ..

Gene 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

This is great information for first time home buyers.

Have a very special weekend.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) over 3 years ago

Gene,

This is a very informative blog and on point about borrowers closing costs.  I like #5, Shirely's comment.  I agree,  when borrower are working with a good lender early, it also helps the realtor.  It is very helpful to the know what the closing costs needs are when negoiating offers on their behalf.  Another great blog!

Posted by Dinah Stallworth-Lewis, NATCHITOCHES, LA HOMES FOR SALE (Priority Real Estate LLC - 800.978.4847) over 3 years ago

It is important for buyers to have an idea what the closing costs will be -- as well as pre-paids.. Often they don't understand the difference and the total funds they will need.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 3 years ago

Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com this is a great explanation for first-time home buyers about what to expect regarding closing costs. Although I've bought numerous homes over the years, I never thought of asking the seller to contribute to them.  Is that a relatively newer practice?

Posted by Maureen Bray Portland OR Home Stager ~ Room Solutions Staging, "Staging that Sells Portland Homes" (Room Solutions Staging, Portland OR) over 3 years ago

Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com - just wondering, why application fees vary from few hundred dollars to close to thousand with differnet lenders.

Having said that, you know this post is a keeper for me as I correct my hand-out of closing costs (pretty old now). Thanks a lot for identifying 'paid at closing' so buyers really understand it.

Just one note - Home Inspection costs are not closing costs, my two cents.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 3 years ago

I hope home buyers will read this post. I will bookmark this and share it with others.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 3 years ago

Gene - Nice list of items that could be needed by the buyer during the home buying process! I found it very interesting how different states differ in these costs - for example, in New Mexico, the seller pays many of the costs that buyers pay elsewhere. It's important for buyers to talk to an expert in their area.

 

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com) over 3 years ago

True, Richie Alan Naggar ... in order for potential buyers to make wise decisions, they must have a handle on these costs ...

Appreciate your kind words, Tammy Lankford ... glad to hear that the info proves beneficial for you ..

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Thank you, Roy Kelley ... we did!  Our grandchild spent the day with us on Saturday, making it very special ...

 Definitely information that needs to be shared and discussed between professionals, Dinah Stallworth.  It can prove very beneficial to the clients ... and to the successful timing of a Closing ...

Gene 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

We need to provide them with the info they need to make wise decisions, Joan Whitebook ... 

Maureen Bray Portland OR Home Stager ~ Room Solutions Staging ... this is something that has been done in the Chicagoland for quite a while now.  But the responses I've received here prove that this practice can be somewhat regional in nature.  It happens often here ... but is rare elsewhere ...

Gene

 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Praful Thakkar ... Lenders have varying costs of creating and doing business. Just the sheer difference between banks, brokers, mortgage bankers, etc. ... and the costs involved in the running of those businesses.  Same reason rates are different and products cost varying amounts at retailers.  But your question proves why it's so important to educate yourself regarding these costs .. and the differences that may exist between lending institutions and lenders themselves.

Gene   

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Thank you, Gita Bantwal ... I appreciate you doing that ...

Obviously, New Mexico has seen the benefit of following this practice, Kat Palmiotti.  As others have noted here, it seems to be somewhat regional in practice.  Something we should be aware of, should we refer or do business in other locales ...

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Gene - This is just a prime example of why all buyers need to speak with a lender to learn about the lending process, closing costs, getting pre-approved, and how much home they can actually afford.

Posted by Troy Erickson, Your Chandler, Ahwatukee, and East Valley Realtor (Diverse Solutions Realty www.ChandlerRealEstate.weebly.com) over 3 years ago

Great Post Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com - I've been having this talk with all my clients. They seem to think down payment is it and they dont need anything else. Boy are they wrong! Have a great week!

Posted by Chris Mamone, Senior Loan Officer (Keller Mortgage) over 3 years ago

Sometimes the "advertising" or marketing for these products can be a bit confusing or misleading.  Exactly why we as Lenders have to keep the correct info out there ... often!  Thanks again for the re-post of this info ... it will definitely help, Chris Mamone  ..

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com - Your welcome Gene! Its very valuable information. I think I shared it across my social media platform. Hopefully you'll be getting 100's of views!

Posted by Chris Mamone, Senior Loan Officer (Keller Mortgage) over 3 years ago

Thank you again, Chris Mamone ... I so appreciate your efforts.  Hopefully the info helps AND gets lots of looks ...

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 3 years ago

It's a learning process for buyers and this post is a good tool we can share with first time buyers especially. You make it so easy to see and understand, Gene.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) over 3 years ago

Congrats on your featured blog, hopefully you can keep them coming, topics that are featured take blogging talent!

Posted by Vick The Broker . (Olympus Executive Realty INC.) over 3 years ago

Participate