Buyers’ Residential Real Estate Closing Costs.
Wash DC and MD (Mont. Co.)
Many real estate agents give a fairly vague answer when asked how much closing costs will run for the purchase of a home. You may hear “3-3.5% of the contract price”.
I’ve been guilty of this myself. This is usually the answer we give in the early stages of a property search.
Here’s is how that 3-3.5% is broken down:
1% +/- Lender related fees
1% +/- Title Insurance & Attorney fees
1-1.5% Transfer and recordation tax
The real breakdown generally comes when we’ve ratified a contract. We have the particulars at that point. We have the price of the property, loan amount, and proposed settlement date.
Settlement Guide:
http://www.federaltitle.com/hud1_full.aspx
BELOW IS A GREAT Whiteboard Story by Sayitvisually.com
Closing Costs Explained Visually
800 LOAN RELATED FEES
$_____________ 801 -Loan Origination Fee (1% of loan amount)
$_____________ 802 -Loan Discount Points/Placement Fees (each point. = 1% of loan amount)
$_____________ 803 -Appraisal Fee ($300-$1500; usually paid at loan application, i.e. P.O.C.)
$_____________ 804 -Credit Report $60-$75 each person/ married couple, P.O.C.)
$_____________ 807 -Assumption Fee (check w/ lender, rarely used)
$_____________ 808-10 -Misc. Loan fees (doc. preparation, processing, tax service, underwriting, etc.: $450-$1,000)
$_____________ 811 -Loan Origination/Discount fees on second mortgage, if applicable (each point = 1% of loan amt.)
$_____________ 812 -Misc. Loan fees for second mortgage, if applicable (document prep, processing, etc.: $150 – $500)
900 PREPAIDS OR ESCROW ITEMS
$_____________ 901 -Prepaid Interest on new loan (estimate 30 days)
$_____________ 902 -Mortgage Insurance: (Conventional – typically none if more than 20% down; with less than 20% down check with Lender for
special programs)
***FHA/VA Loans- Funding Fee= 1.5% loan amount. Usually rolled into the loan***
$_____________ 903 -Hazard Insurance Policy (1 year) – estimate $3.50 per $1,000 of sales price usually paid prior to settlement, i.e., P.O.C.
1000 RESERVES DEPOSITED WITH LENDER
$____________ 1001 -Hazard Insurance (2 months premium)
$_____________ 1003-04 -Real Estate Taxes (estimate 7 months. 14 months in MD if Seller or Buyer is not an owner occupant)
$_____________ 1006 -Mortgage Insurance Premium (loan amount x .0075 /12= MIP. Confirm with your lender)
1100 TITLE CHARGES
$_____________ 1101-07 -Settlement Fee, Including: Settlement Fee/Title Abstract & Examination, Doc. Preparation, Title Binder, Notary, Misc. ($500 – $1,000) 2nd Trust may incur Additional Fee.
$_____________ 1108-10 -Title Insurance (Reissue Rate may be available. Check appropriate option):
___Lender’s Coverage only – $2.65 per $1,000 of loan amount
___Owner’s Coverage only *(DC) $4.50- $5.70 per $1,000 of sale price
*(MD) $4.50 per $1,000 of sale price
___Owner’s & Lender’s Coverage – add $50.00 to Owners
1200 MONTGOMERY COUNTY GOVERNMENT RECORDING AND TRANSFER CHARGES
$____________ 1201 -Recording Fees- Deed, Mortgage, etc. ($100 – $250)
$_____________ 1202 -County Transfer Tax (check appropriate option):
___Unimproved/non-residential property: 1% of sales price
___Residential $70,000 or more 1% of sales price
___$40,000 to $69,999 – ½% of sales price
___Less than $40,000 – ¼% of sales price
$_____________ 1203 -State Transfer Tax (½% of sales price. Reduced to ¼% and the ¼% must be paid by Seller if Buyer is a first-time Maryland Owner Occupant Home Buyer)
$_____________ 1204 -Recordation Tax (.69% of sales price up to $500,000. 1.0% of any portion of sales price over $500,000. Subtract $345 if the property will be Buyer’s Principal Residence as defined by Montgomery County law.)
NOTE: Unless otherwise negotiated, items 1202, 1203 and 1204 are divided equally between Buyer and Seller, except in the case where Buyer qualifies as a First-Time Maryland Owner Occupant Home Buyer. In such case, where Buyer does qualify as a First-Time Maryland Owner Occupant Home Buyer, then items 1202, 1203, and 1204 shall be paid entirely by Seller, unless otherwise negotiated.
1200 DC GOVERNMENT RECORDING AND TRANSFER CHARGES
$____________ 1201 -Recording Fees – Deed, Mortgage, etc. ($50 – $150)
$_____________ 1205 -Recordation Tax (for residential use properties)
• 1.1% of sales price if price is under $400,000
• 1.45% of sales price if sales price is $400,000 or higher
1300 ADDITIONAL SETTLEMENT CHARGES
$____________ 1301 -Survey (House Location Drawing $200 – $500) or Boundary Survey ($500 – $3,000)
$_____________ 1302 -Pest Inspection ($50 – $150)
$_____________ 1303 -Inspection Fees (Home__, Lead__ , Radon__ ) (POC)
$_____________ 1304 -Condominium, Cooperative or HOA Dues (proration plus 1 full month or quarter)
$_____________ 1305 -Broker’s Fee (flat fee portion): $345 (plus any other amounts due under Buyer Agency Agreement, if applicable)
$_____________ 1306 -Other
$_____________ TOTAL ESTIMATED SETTLEMENT COSTS
THE ABOVE FIGURES ARE ESTIMATES. RATES AND CHARGES VARY WITH LENDERS, ATTORNEYS, TITLE COMPANIES AND INSURANCE COMPANIES. COSTS ARE SUBJECT TO CHANGE, AND ARE NOT GUARANTEED BY BROKER/AGENT.
THE TOTAL ESTIMATED DUE AT SETTLEMENT (SEE ABOVE) MUST BE PAID BY CERTIFIED, TREASURER’S OR CASHIER’S CHECK MADE PAYABLE TO SETTLEMENT ATTORNEY OR TITLE COMPANY. FUNDS MAY ALSO BE PROVIDED BY ELECTRONIC TRANSFER.
LENDERS REQUIRE A HAZARD INSURANCE POLICY WITH A PAID RECEIPT OR
CERTIFICATE OF CONDOMINIUM INSURANCE, WHERE APPLICABLE, PRIOR TO CLOSING.
Now you see why some agents may give round numbers when discussing Buyer’s Closing Costs. There are many variables involved with your investment when purchasing a home.
Contact a Realtor for proper representation. It doesn’t cost a buyer any more than a small administrative fee which is paid at closing (line 1305). Happy house hunting!
Now you see why some agents may give round numbers when discussing Closing Costs. There are many variables involved with your investment when purchasing a home.
Contact a Realtor for proper representation. It doesn’t cost a buyer any more than a small administrative fee which is paid at closing (line 1305). Happy house hunting!
Andy Peers
(Long and Foster Realtors)
301.370.4499
andy.peers@longandfoster.com / www.peersrealty.com
