It’s arguably one of the scariest things about buying a house. Sure, you know you can secure your financing. But, do you have the cash to get into the house you want? I have this handy-dandy sheet that I fill out, although an estimate, it has been SO helpful for my buyers to see it ahead of time. Many times, I’ll bring it TO the showing, so they are forewarned and aware of what they’re looking at as far as cash to get IN to the house before they even put in an offer. Why do I do this? A client of mine actually backed out of the deal after the inspection due to the money she’d need to get into the house.
It isn’t an astronomical amount- don’t freak yourself out! There is always an option to ask the seller for assistance, we call this, seller paid closing costs. Now, on an FHA and VA loan, you can ask up to 6% of the purchase price. You offer $120,000, so you can ask for $7,200 in closing costs. (you will NOT need this much!) On a conventional loan, you can ask for up to 3%, which is going to be about what would be feasible to ask for in this situation and market.
Please understand, that sellers paid closing costs does NOT include your down payment! Your down payment is completely separate and up to you to fund. If you have any sort of a decent lender, they’ll only preapprove you knowing you can afford the down payment. Back to closing costs….
I am sharing a real form that I use. I have tailored it to fit the house we need, and I am using an FHA loan, which requires 3.5% down. Let’s do this! (if you need more information about the kind of loans that are out there- do NOT hesitate to reach out! I have some good info, and some really incredible lenders behind me to support us!)
Let’s break it down a bit, by section, for you to understand. Section 1- Estimated Lender Charges. For example, the lenders I have used are usually around $800 or less for this entire section.
Section 2- Settlement Costs. This is where your appraisal fee will be, pest inspection, home inspection (paid OUTSIDE of closing, meaning that you pay for the inspection if and when you get it done… usually 10-14 days after accepted contract) and Broker Admin fee (varies with every broker!). We’re talking about $1500 on this section.
Section 3- Title Charges. Title insurance, you will pay half, and the seller will pay half. For a $120,000 house the title insurance is $537.50, therefore your half is $268.75. Lender closing fees, other services such as courier or endorsement fees. This section averages $800 or less.
Section 4- Escrow Account. Every county is different. Paying ahead, in arrears… I like to average high, here, so as not to freak my clients out when they get their actual closing disclosure. 9 months of taxes will sit in escrow and 3 months of home owners insurance. On a $120,000 house here in Omaha, we will average it around $1500 a year. (I took 8 listings, averaged their taxes and it was $1300, but 2 were incredibly low) $125/month in taxes, so your initial deposit of 9 months of taxes will be $1,125. Insurance, let’s just average $75/month…. $1325 for the initial deposit total. ESTIMATE!
Section 5, daily interest charges. At 4.5%, you’ll pay $15 a day in interest charges, so depending on when you close, it could be as little as $15, and as much as $450. (if you close on the 1st, it’s $15. Close on the 30th, its $450.) I closed on our sheet on the 15th to give you a good idea of how different this section can be.
Section 6- Home Owners insurance. Hazard insurance I like to estimate at $1200 a year, and nothing for flood insurance unless you’re in a flood zone. Last section will add everything up…. here we go!
TOTAL: $6325. Ask for a few thousand dollars from the sellers… and you will see this number decreased, obviously. Check out the cost statement I have below. EVERY ONE IS DIFFERENT- every transaction is so so different. The loan type, interest rate, length, down payment requirement, fees…. you name it, nothing is ever the same. So, this is an EXAMPLE and a very rough estimate. Please contact me if you’d like me to throw one together for you!
Buyers of mine are in a $150,000 home and pay $1150 a month. I cannot stress how different situations can be. Please let me know if you’d like me to run some scenarios for you!