Posts Tagged ‘costs’

Can someone give me a general idea of how much home closing costs are?

by seier+seier

Question by DaniJohnson: Can someone give me a general idea of how much home closing costs are?
I know closing costs vary, but can you give me a general idea of how much it is? Like, is it in the hundreds or thousands?

I’m still in high school, but i’m trying to gather some information about buying a home.

Best answer:

Answer by Othniel
A good faith estimate is given by the lender but for your purposes a phone call to a title agency that does real estate closings in your area will give you all the information you need.

Give your answer to this question below!

Why Home Closing Costs are Necessary?

by wallyg

Home sweet home, is it just a dream? You might feel this way when you are in the final stages of closing and discover the home closing costs. This is an area where many go into sticker shock. So let’s take a look at those costs in purchasing a new home.

Don’t worry I will clear up your doubts. Everyone’s basic need is to have a nice home to live in. While we are waiting for the transactions to be completed, there are miscellaneous expenses that occur in finalizing your purchase known as home closing costs. These include things such as:

deed recording fees
surveys
property taxes
loan origination fees
discount
appraisal
title fees

As you can see from the list, these are necessary items to complete the transaction of buying your new home. Home closing costs are also called settlement costs. When you have a transaction that includes a lender, a borrower, and real estate, then you will have a real estate settlement document to itemize these costs. Many of these cannot be avoided. Although there are some that are negotiable. An example of one is the loan origination fee.

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These costs are paid to the lender for the fees that have accumulated to complete the transaction. The mortgage makes it possible for you to make such a large purchase as a home. Thus the lender can establish the principles for you to obtain this large debt from the bank which provides the loan. Any kind of assets can be categorized to assure your ability to pay back this debt. So there are fees involved to qualify you as a good risk. These are part of the mortgage closing costs.

On an average 3% -5% of the purchase price is what you can estimate the home closing costs for buying a home will be. Never oblige yourself for the payment of a mortgage that goes beyond your earnings. I had one young girl ask me about a mortgage she qualified for that was for 0,000. She loved the home but only had a total earnings between her and her fianc? of ,000 per year. They did not have the earnings to afford this mortgage. They would have found it too much to handle and would soon find themselves loosing the home. So don’t commit yourself to a mortgage that you cannot afford. Read the documents carefully before signing.

Within three days of their loan application, a lender should provide you, the buyer, a good faith estimate document, which is the hypothetical rule of the amounts that are to be estimated. But the original regular prices may go beyond this estimation at the final closing. Bring the good faith estimate document with you so you can compare. Also, ask for an updated good faith estimate document just prior to closing.

Normally, the time factor for clearing out these settlements is prior to the closing. Home closing costs are a necessary part of buying a home. Hopefully all your doubts have been cleared and you can proceed with the closing. Enjoy that beautiful home you are about to buy!

Why are there Buyers Closing Costs

by eyewash

Many home buyers want to know why there are buyers closing costs! Isn’t buying the house enough money to put out? Why do you now have to come up with closing costs?

These are very good questions and when you understand what is involved it will make since why there are these buyers closing costs.

First of all, when you buy a home, you are usually applying for a mortgage. That is unless you have cash to pay for the home. Since most people do not have the quantity of cash necessary to buy the home they have to borrow it. So most of the closing costs that the buyer has to pay are mortgage closing costs.

Basic Mortgage Closing Costs

Loan origination (these are usually 1% of the mortgage)
Discount points (this is the amount you pay to buy down your interest rate)
Title search (you want to make sure you have a free and clear title to the property you want to buy, otherwise there may be a question of your ownership at some time in the future)
Title insurance
Appraisal
Credit report
Recording fees (this fee is usually required by your local government)
Prepaid interest on your mortgage (interest starts at closing, but your payment may not be due for a month, so the interest that will accrue from closing until your first payment is collected)
Private mortgage insurance premium
Property taxes (depending on when close, the seller may have already paid the property taxes, thus you have to pay the portion from the date of closing to when the next tax is due to the seller)

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When you look at this typical list, you can see that these would be costs that you the buyer would have to pay. These are just costs that normally come because of the mortgage. Remember this is just a basic list. There could be other fees besides the ones listed here.

Of course there is a down payment you will have to have also. Buyers closing costs are fees you pay in addition to the down payment. So do not be surprised when you find out you have home loan closing costs to pay. But do not let those costs scare you. This part of buying a home.

If you are not prepared to pay these costs, some can be negotiated. But others are fixed so you cannot change them. Some loan programs will allow the seller to help with some of the buyers closing costs. So make sure you find out if your loan program allows for this. Then you have to get the seller to agree!

Another thing you can do is negotiate a lower origination fee. Although sometimes the lender will ask for a higher interest rate to accomplish this. So take a close look to see if it is worth it if the lender counters with a higher interest rate.

Also pay attention to those miscellaneous fees on the good faith estimate. Sometimes unnecessary closing costs are hidden there. These fees should be explained to you. Watch for fees that sound similar.

All in all, most of these buyers closing costs are necessary to close on your mortgage. So do your homework and soon you will be decorating your own home.

Find More Home Loan Closing Costs Articles

Home Closing Costs Explained

by teamperks

It is very important for a first time home buyer to choose a right loan when buying their first home, which might have been a long term cherished objective for the person.

Recently I met one of my neighbors in a restaurant and decided to join him, as both us were sitting alone. After the customary family related questions and answers, our topic of discussion turned towards home loans and the home closing costs associated with it. My neighbor had recently purchased a home for his son in a place near Atlanta. He was telling me how he chose his lender and I found it quite interesting. I wanted to share some of his key points, which will be very helpful in choosing the right institution.

Apart from the interest rates, which is going to be a recurring expense on a monthly basis, there is another important one time cost to consider. This is the most important cost required to evaluate institution in the one time cost category, the home closing cost. Every institution has some standard closing cost items which will vary from lender to lender. One example of a standard closing cost is the document recording fees, where the borrowers will pay the local government.

Apart from those standard costs, there are other costs collected. As a borrower you can negotiate with the mortgage lenders regarding these costs. These varying home closing costs incurred by the borrower can include the following:

appraisal fee
origination fee
credit reporting fee
processing fee
underwriting fee

You can expect these home closing costs to range from between 3%-5% of the loan amount.

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Origination Fee

Now, coming back to the varying closing costs, the first fee in that list is the origination fee which is nothing but the fees for getting the initial quote details using the borrower’s data. Sometimes this fee might be used by the lender for some other purposes. This is usually between .5% – 1.75% of the loan amount.

Appraisal Fee

Next in this list is the appraisal fee. This is the fee paid to an external appraiser, usually appointed by the institution. The appraiser will inspect your home and provide the current market value for your house to the lender. This is required to safeguard the lending institution from any unscrupulous borrowers or in case of any interest payment defaults. Most of the lenders charge around 0 for the appraisal fee.

Underwriting and Processing Fees

The underwriting and processing fees are collected for providing services. The underwriting service is used to gauge the credit worthiness of the borrower by looking at the borrower’s credit level, assets, and debt to income ratio.

All the above mentioned fees vary in price and in some cases the borrower can do some bargaining on these fees. By law the loan officer has to provide an estimate of all these fees upfront. This estimate is known as the Good Faith Estimate.

Every institution should provide a list of home closing costs as a Good Faith Estimate right upfront. Some lenders might take some time to provide these estimates as they are trying to buy some time to arrive at the rates favorable to them. It’s always advisable for the borrower to request this estimate as early as possible. Borrowers can then compare this estimate with estimates provided by other lenders. This will give the option of bargaining for a good rate with the mortgage lender. But remember, this is only an estimate. Some mortgage closing costs will change before closing, so watch this.

Refinance With No Closing Costs – When to consider it?

You see an advertisement and it says “ refinance with no closing costs“. Although you may think that this is a good deal, it usually isn’t most of the time. You may think it is good, but make sure you are evenly weighting out your options. It almost never means “FREE!” Read the rest of the article and find out if you should stick with closing costs or are better without them.

Remember, closing cost loan mean higher rate. You usually still end up paying the fees just in a different form. Your interest rate will be higher to cover the closing cost you are not paying for. Instead of paying a whole payment, every month you will pay more money. This may work better for people not having to pay a whole chunk at a time, but over the long term, it may be that you over pay!

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The brokers that are also handling the loan also get paid. The lenders worry about this payment because they pay them with the extra interest money they are making. Nobody in this business woks for free.

At times they may be a good ideas and at certain times they just might want to be straight out avoided. They are not always bad, they also have their plus points. These will limit writing big checks, something many people struggle with.

Here are two instances when you should consider refinancing with no closing costs:

1. The rates are currently high but son they may go down

2. You are only planning on keeping the loan for a few years.

So if this is not a long term fix, you may way to choose the no closing cost option. This is better because you will only pay the high interest for a short amount of time and not even have to pay the extra closing costs.

No closing costs loans are more expensive over the long term because you pay a lot for the high interest rate. You will benefit over the long term if you choose a closing sot loan.

On the other hand, here is when to consider a closing cost loan:

This should be avoided and sometimes not. It does hurt to pay the loans up front but it may save you over the long term as you analyze the big picture.

Here are 3 instances you should think about closing costs:

1. If the rates are currently low and you think they will soon ride

2. You are planning on keeping the loan for many years

3. The cheapest rate isn’t affordable by you

But before you come up with a decision, Make sure you compare several types of loans. Make sure you weigh your options as logically as possible to avoid making a bad choice.

Nice Lowest Closing Costs photos

Some cool lowest closing costs images:

AIDS LifeCycle Day 7 – Closing Ceremonies 004


Image by calvinfleming
AIDS/LifeCycle Closing Ceremonies in Los Angeles – 2,350 AIDS/LIFECYCLE RIDERS RAISE RECORD + MILLION, BEGIN 545-MILE TREK ON 30TH ANNIVERSARY OF AIDS

Seven-day Bike Ride from San Francisco to Los Angeles, World’s Largest Annual AIDS Fundraiser, Draws Participants from 11 Countries

SAN FRANCISCO/LOS ANGELES – June 5, 2011 – Today, exactly 30 years after the nation’s war with AIDS began, 2,350 bicyclists and 600 volunteer “roadies” begin their seven-day journey toward Los Angeles as participants in AIDS/LifeCycle, a 545-mile bike ride from San Francisco to Los Angeles and the world’s most successful AIDS fundraiser. Hailing from nearly every state and 11 countries, they have raised a record ,060,000 for the HIV/AIDS services of the L.A. Gay & Lesbian Center and San Francisco AIDS Foundation.

“AIDS/LifeCycle brings together a community of dedicated and compassionate people to make a world of difference in the lives of people living with HIV/AIDS,” says San Francisco AIDS Foundation CEO Neil Giuliano. “Historic levels of participation and support in AIDS/LifeCycle 10 send a powerful message that 30 years into the epidemic, fighting HIV/AIDS and raising awareness are still top concerns for thousands of people. This ride, and the heroic spirit of everyone involved, is changing the course of the epidemic by allowing us to provide free services for HIV prevention and care in communities most vulnerable to the disease.”

Joining the AIDS/LifeCycle community this year are celebrity trainers Cara Castronuova (The Biggest Loser) and Scott Herman (The Real World: Brooklyn), who are sharing their messages of healthy living and spreading the word that HIV/AIDS still needs our urgent attention as we enter the fourth decade of fighting the disease.

On June 5, 1981—30 years ago today—the Centers for Disease Control and Prevention (CDC) issued its first report about the disease then known as Gay-Related Immune Deficiency (GRID) and later known as AIDS. The report detailed the case studies of five gay men in Los Angeles; by the time it was published, two of the five men had died. Since the earliest days of the epidemic, both the L.A. Gay & Lesbian Center and the Foundation have taken a leadership role in fighting HIV/AIDS. Today, both organizations remain at the forefront of efforts to reduce new HIV infections and ensure access to proper medical care for everyone who needs it.

“For 30 years, we have been under attack by HIV and AIDS—and the fight is far from over,” says L.A. Gay & Lesbian Center CEO Lorri L. Jean. “Too many people believe that the problem is no longer significant in the U.S. Yet the infection rate for gay and bisexual men continues to climb. The riders and roadies of AIDS/LifeCycle are heroes in the fight against AIDS; together, they have raised millions to help prevent the spread of HIV and improve the health of people in our communities living with the disease.”

Today, 1.1 million Americans are living with HIV—the highest number in the history of this decades-long crisis. More than 1 in 10 of those live in California. And 1 in 5 of those living with HIV don’t know it. Gay and black communities are especially hard hit. New HIV infections among gay and bisexual men in the United States are on the rise—the only risk group for whom this is the case—and a 2010 CDC study found that a shocking 20% of gay and bisexual men in 21 U.S. cities are HIV-positive.

For more information, go to www.aidslifecycle.org.

AIDS/LifeCycle sponsors include: Presenting Sponsors FedEx, Gilead and Shopoff Properties Trust; Carbon Fiber Sponsors Advocate.com, American Medical Response, Cannondale, Google and Joie de Vivre; Titanium Sponsors GMC, Safeway, U-Haul and Well Fargo; and additional sponsors UCSF Medical Center, Southern California University of Health Sciences, Rainbow Sound, Powerade, Paceline, Clif Bar and Charles Schwab. Community Platinum Sponsors include Bike Attack, Helen’s Cycles, Mike’s Bikes and Sports Basement.

# # #

About the L.A. Gay & Lesbian Center
Since 1971 the L.A. Gay & Lesbian Center has been building the health, advocating for the rights and enriching the lives of lesbian, gay, bisexual and transgender people. Our wide array of services and programs includes: free HIV/AIDS care and medications for those most in need; housing, food, clothing and support for homeless LGBT youth; low-cost counseling and addiction-recovery services; essential services for LGBT-parented families and seniors; legal services; health education and HIV prevention programs; transgender services; cultural arts and much more. Visit us on the Web at: www.lagaycenter.org.

About San Francisco AIDS Foundation
San Francisco AIDS Foundation works to ensure the HIV epidemic ends in the same city where it began. By combining innovative, evidence-based programs for HIV prevention and care with bold policy initiatives focused on issues ranging from harm reduction to total health and wellness, the agency is making sustainable progress against HIV among populations most vulnerable to the disease. Established in 1982, San Francisco AIDS Foundation refuses to accept that HIV transmission is inevitable.

AIDS LifeCycle Day 7 – Closing Ceremonies 005


Image by calvinfleming
AIDS/LifeCycle Closing Ceremonies in Los Angeles – 2,350 AIDS/LIFECYCLE RIDERS RAISE RECORD + MILLION, BEGIN 545-MILE TREK ON 30TH ANNIVERSARY OF AIDS

Seven-day Bike Ride from San Francisco to Los Angeles, World’s Largest Annual AIDS Fundraiser, Draws Participants from 11 Countries

SAN FRANCISCO/LOS ANGELES – June 5, 2011 – Today, exactly 30 years after the nation’s war with AIDS began, 2,350 bicyclists and 600 volunteer “roadies” begin their seven-day journey toward Los Angeles as participants in AIDS/LifeCycle, a 545-mile bike ride from San Francisco to Los Angeles and the world’s most successful AIDS fundraiser. Hailing from nearly every state and 11 countries, they have raised a record ,060,000 for the HIV/AIDS services of the L.A. Gay & Lesbian Center and San Francisco AIDS Foundation.

“AIDS/LifeCycle brings together a community of dedicated and compassionate people to make a world of difference in the lives of people living with HIV/AIDS,” says San Francisco AIDS Foundation CEO Neil Giuliano. “Historic levels of participation and support in AIDS/LifeCycle 10 send a powerful message that 30 years into the epidemic, fighting HIV/AIDS and raising awareness are still top concerns for thousands of people. This ride, and the heroic spirit of everyone involved, is changing the course of the epidemic by allowing us to provide free services for HIV prevention and care in communities most vulnerable to the disease.”

Joining the AIDS/LifeCycle community this year are celebrity trainers Cara Castronuova (The Biggest Loser) and Scott Herman (The Real World: Brooklyn), who are sharing their messages of healthy living and spreading the word that HIV/AIDS still needs our urgent attention as we enter the fourth decade of fighting the disease.

On June 5, 1981—30 years ago today—the Centers for Disease Control and Prevention (CDC) issued its first report about the disease then known as Gay-Related Immune Deficiency (GRID) and later known as AIDS. The report detailed the case studies of five gay men in Los Angeles; by the time it was published, two of the five men had died. Since the earliest days of the epidemic, both the L.A. Gay & Lesbian Center and the Foundation have taken a leadership role in fighting HIV/AIDS. Today, both organizations remain at the forefront of efforts to reduce new HIV infections and ensure access to proper medical care for everyone who needs it.

“For 30 years, we have been under attack by HIV and AIDS—and the fight is far from over,” says L.A. Gay & Lesbian Center CEO Lorri L. Jean. “Too many people believe that the problem is no longer significant in the U.S. Yet the infection rate for gay and bisexual men continues to climb. The riders and roadies of AIDS/LifeCycle are heroes in the fight against AIDS; together, they have raised millions to help prevent the spread of HIV and improve the health of people in our communities living with the disease.”

Today, 1.1 million Americans are living with HIV—the highest number in the history of this decades-long crisis. More than 1 in 10 of those live in California. And 1 in 5 of those living with HIV don’t know it. Gay and black communities are especially hard hit. New HIV infections among gay and bisexual men in the United States are on the rise—the only risk group for whom this is the case—and a 2010 CDC study found that a shocking 20% of gay and bisexual men in 21 U.S. cities are HIV-positive.

For more information, go to www.aidslifecycle.org.

AIDS/LifeCycle sponsors include: Presenting Sponsors FedEx, Gilead and Shopoff Properties Trust; Carbon Fiber Sponsors Advocate.com, American Medical Response, Cannondale, Google and Joie de Vivre; Titanium Sponsors GMC, Safeway, U-Haul and Well Fargo; and additional sponsors UCSF Medical Center, Southern California University of Health Sciences, Rainbow Sound, Powerade, Paceline, Clif Bar and Charles Schwab. Community Platinum Sponsors include Bike Attack, Helen’s Cycles, Mike’s Bikes and Sports Basement.

# # #

About the L.A. Gay & Lesbian Center
Since 1971 the L.A. Gay & Lesbian Center has been building the health, advocating for the rights and enriching the lives of lesbian, gay, bisexual and transgender people. Our wide array of services and programs includes: free HIV/AIDS care and medications for those most in need; housing, food, clothing and support for homeless LGBT youth; low-cost counseling and addiction-recovery services; essential services for LGBT-parented families and seniors; legal services; health education and HIV prevention programs; transgender services; cultural arts and much more. Visit us on the Web at: www.lagaycenter.org.

About San Francisco AIDS Foundation
San Francisco AIDS Foundation works to ensure the HIV epidemic ends in the same city where it began. By combining innovative, evidence-based programs for HIV prevention and care with bold policy initiatives focused on issues ranging from harm reduction to total health and wellness, the agency is making sustainable progress against HIV among populations most vulnerable to the disease. Established in 1982, San Francisco AIDS Foundation refuses to accept that HIV transmission is inevitable.

Home Buying Closing Costs and Process Explained

by SS&SS

One of the great mysteries of home buying, at least to those who have never been through the process, is closing costs. While nearly everyone has heard of them, few who haven’t had to pay them really understand them. Even some people who have paid them aren’t sure what they spent all that money on.

Closing costs are the various fees that a homebuyer must pay before the mortgage lender will finalize the mortgage. Generally speaking, these costs are about 3 to 6 percent of the amount borrowed. That is in addition to your down payment. Following are some of the components of your total closing costs.

The lender will charge an application fee to cover the costs of completing your mortgage application. This may or may not include the fee for your credit report. They will also charge a loan origination fee, also known as points. This covers the administrative costs of processing your mortgage. One point is equal to 1% of the total amount loaned.

Many lenders offer the option to purchase without points, but keep in mind that this will result in a higher interest rate. There are also lenders who will let you pay additional points to lower the interest on your loan.

Title insurance will be required by your lender. This protects you and the mortgage company in case the seller does not have the legal right to sell it. There could be unknown co-owners of the property, or it could have an unpaid lien against it that would prevent the seller from legally selling it.

An appraisal is also required by lenders. This is to ensure that the home is worth the amount loaned to you to purchase it. A home inspection is not usually required, but it’s a good idea to have one. The cost of the inspection could also be considered part of closing costs.

Homeowners insurance is a standard requirement of mortgage lenders. They will require proof of it and may require you to pay the first year’s premium before closing. Private mortgage insurance may also be required depending on the amount of your down payment, and part of the fee will be included in your closing costs.

Taxes associated with the transfer are usually the buyer’s responsibility, unless other arrangements are agreed upon. You may also have to pay for a survey of the property. You will likely be required to pay the interest accrued between the time your mortgage was originated and the due date of your first payment. Attorney and notary fees may also be a part of your closing costs.

Closing costs are comprised of all of the expenses that must be paid before the purchase of your new home is finalized. Points are a fee charged by your lender that may be somewhat flexible and directly affect your interest rate. Knowing what these terms mean and what fees they consist of can help you be more prepared for them when the time comes.

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Cool Lowest Closing Costs images

Check out these lowest closing costs images:

bbb low-cost housing, tegnestuen vandkunsten


Image by seier+seier
bbb low-cost housing, kvistgård, elsinore, denmark.
architects: tegnestuen vandkunsten, 2004-2008.

before closing everything down for the summer, I thought I’d take a break from my palermo photos and show you a few snapshots from the completed first stage of the bbb housing project I have worked on for tegnestuen vandkunsten.

many of you commented on the prototype I uploaded last year, here is a chance to see the finished project. people started moving in about half a year ago if I remember correctly. the photos are from yesterday…

as I have written earlier, it is a courtyard project in which the houses are gathered nine by nine in clusters around a small, communal garden or square. the clusters are all identical but they are placed freely on a sloping site which centres naturally on a little lake.

I can’t help feeling that the low-cost tag is not entirely fair. we did the original competition with a high degree of prefabrication in mind but the impact of repeated units is softened considerably by the quality of the site and the scale of the buildings…but most importantly, we never felt we were made to compromise for budget reasons. it remains a central tenet and experience of vandkunsten that key qualities of housing are independent of budget. that may be a provocative statement to all those struggling with budget restraints in social housing, but just think about how often the wrong decisions are forced on a project by thick-headed bureaucrats and ignorant clients rather than a lack of money.

what made me really happy yesterday was the way people are making the place their own. what I saw was only the beginning and as such both careful and hesitant, but it showed an impressive understanding of our intentions. I only fear there are too many restrictions on what residents are allowed to do. we love rules in denmark but the real sustainability of this project does not lie in the sturdiness of its materials but in the fundamental adaptability of its scale and method of construction. I hope changes will be allowed over time.

I also can’t wait to see what people will make of their communal squares. they were finished simply with a lawn and a couple of young apple trees but the possibilities for making unique and personal spaces out of them are many and the process of doing so should generate a real sense of community…not that it seems to be lacking. from our client we have heard stories of how people are helping each other moving in – always a challenge, but particularly so in a project where you have to do part of the finishing work yourself.

when you arrive at a place as a stranger, the sense of community often proves itself as a kind of natural surveillance. this place is full of kids (as we had hoped) and people were discreetly keeping an eye on me and my camera as I toured the place, a sign of the individual responsibility they feel. you cannot force that on anyone but you can support it in the design: here, in the way all kitchens open onto the communal garden; in the way the covered access becomes a niche in that space while at the same time framing a view of the private garden and the landscape beyond.

all modest means, describing a modulation of social spaces from public to private.

our own discussion at home right now is whether we should move there ourselves. it would be so much better for our daughter but it would add 40 kilometers to our daily commute – both ways – a problem as old a suburbia itself.

my first text on the project
client’s project web site
www.vandkunsten.com

Bedford CA – close up


Image by gingerbeardman

Mortgage Refinance With No Closing Costs – No Closing Cost Refinancing

In the past you have probably been told a numerous amount of times that there is no such thing a mortgage refinance with no closing costs. In fact there is, but it’s true it’s hard to find one. But let’s say you run into an excellent mortgage with no closing cost fees, would you go for it?

What do closing costs cover?

Closing costs are made of many fees that the lender must pay for the services involved with getting a loan. Closing costs are usually very important because the items involved with a loan are very important to secure a loan.

When to consider aMortgage refinance with no closing cost ?

Here are two instances that a mortgage refinance no closing cost may be right for you:

1.    You plan on having the property for less  than 5 years. Remember if your plan for the future exceeds 5 years, don not choose this option.

2.    If you don’t have enough money to pay the closing costs at a later time, then defiantly go for a no closing cost deal.

3.  If you want to refinance your home. Take an advantage of this opportunity.

Here is what closing cost cover:

They include the appraisal fee, credit report check, lenders fees and the broker’s fees. Some other things they include are title insurance, escrow fees, and any recording fee related to the action. Id you decide to go for the loan without closing costs- keep in mind that you will still have to pay property taxes, insurance and interest. These items are not classified as closing costs. There are mortgages which require no closing costs. These are known as “No Points No Fees” (NPNF) refinances and in these mortgages your lender paus for all you closing costs that keep recurring. This may sound like a good deal, but do remember there are many drawbacks to this “Perfect Sounding” loan.

What are the drawbacks?

First off, be prepared that you must accept a higher interest rate. This is usually .250% or even as high as .500% higher than normal. Even a quarter or half percent does make a difference, but usually not as much as closing costs. This is a decision you must make. Also it can usually end in lots of confusion and often times you may end up paying more than if you had stuck with the closing costs. As in this case, “free” doesn’t always mean “free”. In these cases you will pay more every month that you had wished!

It is very important to consider the drawbacks of each of the two types of loans.The closing costs deals might work better in some cases and maybe nit in other cases. You just have to go with what fits your money and standings. Both have their advantages and cons but a loan with a closing cost may be the way to go. Don’t get too bogged down in trying to find a mortgage refinance with no closing costs.

FHA 203k Closing Costs

by Ken Lund

FHA 203k Closing Cost for Renovation What Homebuyers and Homeowners Should Know.

Like all other real estate loans, the FHA 203K has the same typical closing costs such as Title, Lender, Attorney, Escrow and Recording Fees to name a few, but unlike the others there are also additional calculations involved that you’ll need to consider when financing a 203K Loan. The first thing you’ll need to do when figuring out 203K closing costs is to list and estimate the cost of all the repairs & rehab that you are planning for the property. This is essential because the 203k closing costs will be calculated based on this amount. The following is a list and explanation of costs involved when financing a 203K Loan

Standard Fees: FHA 203k Contingency Reserve
The first step is figuring out the FHA 203k contingency reserve on the repair & rehab costs…The contingency reserve are for overruns and un-expected expenses that can arise during the project. Now, if you ever had to hang up a picture on a wall and had to make two holes to place one nail then you’ll understand why this reserve is needed. The amount for this reserve is 10% based off of the repair & rehab amount but can go as high as 20% depending on the project and property. The amount of the reserve is actually not a true cost because if you were to stay on budget the contingency reserve left over can be used to pay down the original loan or used for any extra work if approved.

FHA 203k Inspections & Title Updates
Inspections and title updates are completed to make sure the work is done and no additional liens are put on the property. Inspections are done by HUD Cost Consultants or Appraisers depending on whether it’s a Standard (Full) FHA 203k or a Streamline 203k loan. Costs can vary on both of these fees. An average estimated amount to use would be 0 to 0 for Inspections and for Title Updates.

Mortgage Payments Financed
If you have an FHA 203k loan that is the Standard version (full) rather than a Streamline then you can finance up to 6 months of payments. Now as appealing as living with dust and loud noises while cooking on a bunsen burner might be to some, it’s good to know the rest of you have the choice to have all the repairs and rehab done before moving in. Of course there are economic factors that play a role as well. Adding more money to your new loan may sound financially un-feasible but the flip side would be the cost of your comfort or the extra work time needed when a property isn’t vacant which in return would have a cost.

Architectural and Engineering Fees
If you’re doing an FHA 203k Streamline these fees would most likely not apply. But for projects that do need an architect or an engineer this cost can be financed into the 203k loan. Keep in mind that this fee depends on the scope of the Architect/Engineer services and is associated with the type of project your doing rather than with the 203k loan.

Consultant Fees
Standard (Full) 203k loans need an FHA cost consultant and are optional on 203k Streamlines. Their role in short is to review the work estimates so that they can do the work write ups, inspect the completed work and fill out the paperwork needed to get the checks released. Their fees range from 0 to 00 and higher when the repair or rehab amounts are over 0k and when there is more than one unit. My advice is to talk to your consultant so you know what to expect from them and what the cost will be.

Permits
The repairs or rehab for your project may require permits from local city or county agencies. When permits are required the cost can be added into your 203k loan amount as well. Your contractor should be aware of any permits needed and should let you know when giving you an estimate.

Supplemental Origination Fees for Both Standard 203k and Streamline
On all FHA loans an origination fee is typical. An origination fee is a percentage of the loan amount. For instance a 1% origination on a loan amount of 0k would be ,000. The difference with an FHA 203k loan is that a supplemental origination fee is also added. That amount is 1.5% of the repair or rehab amount or 0.00 whichever is more. Consider this cost as an administration fee for setting up the escrow account that will handle and disburse the checks as needed.

Discount Points on Repair Cost and Fees
Interest rates at times will come at a price on what is called discount points. (Discount points like the origination fee is a percentage of the loan amount.) Same example 1% discount on a loan amount of 0k would be ,000. So, sometimes to get a certain interest rate discount points are charged. Those same discount points would also apply to the repair and rehab amount. Well there it is…the costs associated with the FHA 203k renovation loan. Now remember, these costs only apply to the repair and rehab amount and as mentioned earlier there would still be the standard closing costs such as Title, Lender, Attorney, Escrow and Recording Fees but these costs apply to all Real Estate Loans.

To contact an FHA 203K Loan Specialist for your state and for more information about the FHA 203K Loan visit the FHA 203k Mortgage Lender website where you can download your free FHA 203K guide and resources as well as contact an FHA 203K Lender to get started.