Congratulations, you found your dream home.
Hi, this is Keith Kreis at Charles Rutenberg Realty. In my video series, this one’s gonna be closing costs.
What are they and how they affect you? So let’s say you found your dream home and this house is $200,000 and you’re GOING TO purchase this FHA. FHA requires that you show at least $7000 but is there more to this?
Yes, there is. First, there’s going to be lender’s fees. The lender’s fees are going to cover processing and underwriting. So let’s just say that’s $1000. Then you’re going to have title charges. Title charges are gonna be around $2500. What exactly does a title company do? A title company is like an insurance policy. They’re going to guarantee you that there’s no liens or encumbrances on this property.
And what exactly does that mean? That means there’s not a mortgage or a handyman put a lien on the property or they haven’t paid their association dues so that when you purchase this house and your lender is gonna require this as well, that your property is free and clear when it comes time to purchase this house. So it’s a clean sheet of paper. Next will be attorney’s fees. That’ll be around $500. So your initial down payment of $7000 plus lender’s fees of $1000, title company fees of $2500 and attorney’s fees of $500 brings you up to $11,000 already. Is there more? Yes, but it gets better.
The other fees that you’re gonna include are gonna be an escrow account where you’re gonna pay the property taxes and the homeowner’s insurance and your interest per day. And if we bring that up to about $5000, all of a sudden, we’re at $16,000. But it gets better. In Illinois, we pay taxes in arrears. So what that means is we pay property taxes in 2020 for 2019 so you’re gonna be getting a tax credit.
And generally, and let’s just use the assumption that the property taxes are $6000 but in the contract, we’re gonna ask for 105% which is very standard in collar counties so that means we’re gonna ask for a tax credit. If your property taxes are $6000 and we’ll get a $6300 credit. So that comes to a credit now. So if you’re at $16,000, we’re down, now down to $9700. That’s still more than what you initially went in for with a 3.5% down. Well, when you hire an experienced agent, there’s a way of getting the seller to pay all your closing costs plus.
So if you’re interested in buying a house, please give me a call. I’ll be happy to go over exactly what an experienced agent can do to help save you the most money. You can reach me directly at 630-673-0306.