This is a video overview of my closing cost worksheet. You can see me start here by the type of loan, traditionally a 30-year fixed rate; the purchase price, the loan amount, which in this case is a 90% loan; estimated interest rate, please realize that interest rates can vary daily, sometimes they change two or three times a day, and you can only lock-in an interest rate once you have a ratified contract on a home, so this is an interest rate estimate only that can go up or down. Going down the columns, we see that you’ve got points which are traditionally zero. Most people don’t pay points to do a loan, but if you choose to look at paying discount points to buydown the interest rate, this is where they would go. Appraisal fee, which is an estimate, this can vary depending on the property type. The purchase price, the state, appraisal review fee, credit report fee, all of our other processing fees, flood certification fee. We do not charge tax service fee which goes for setting up tax escrow account.
01:12 S1: So all of the lender fees are highlighted in blue. All of the title fees are highlighted in green. And you’ve got the closing fee, title search, title binder, all the things that the title company does. Title insurance, you should ask the title company about the optional buyers coverage title insurance. The lenders coverage title insurance, which is mandatory, is one thing, but you should also ask about the buyers coverage title insurance and see if you think that’s right for you, and this may change this figure. Survey recertification, a brand new survey is usually never needed. You would just do a recertification of a survey on file.
02:00 S1: In red are any state and city transfer and record agent taxes, recording fees. And then in black are any other charges: Home inspection fee, condo questionnaire, if it is a condominium, it could be somewhere between $50 and $200. That would go towards paying the Property Manager to fill out our condo questionnaire fee which covers questions on the budget and the condominium that we need to know to underwrite a condo; realtor administration fee, a lot of larger realtors have a admin fee to cover their administrative cost. And then this is the total of the closing cost.
02:40 S1: Separately, the prepaids and escrows in purple are homeowners insurance and property taxes that you pay in advance into an escrow account which are set up for the lender to pay the taxes and insurance in the future. The per diem interest which will vary depending on the time of the month that you settle. If you settle at the end of the month, this might be a day or two. If you settle early in the month, this could be 20, 25 days. That totals your escrows and prepaids. This figure totals both the closing cost as well as the escrows and prepaids. Then you subtract any earnest money deposit you’ve given with the contract if you’re at that point. Subtract any seller credit to closing costs or any lender credit, plus a down payment, which in this case was 10% down. That’s the total cash needed at closing.
03:37 S1: Then we go to the monthly payment. The monthly payment consists of the mortgage payment. I give you an estimate for property taxes, estimated homeowners insurance, mortgage insurance. If there’s a condo fee, it would go here, anything else, total, minus your approximate tax write-off. Tax write-off is something that should be discussed with your accountant or CPA. It varies by tax bracket. You need to itemize to even get the tax break. So that’s something to get an accurate estimate of, would be best to go over with a tax professional.
04:17 S1: Then the last column covers the percentage of cost of each category. So you can see that the lender costs are about 8%, about the cheapest segment of all the closing costs. Title costs are about 17% in this scenario. Usually the most expensive costs are the transfer and record agent taxes to the state and county. Other, your escrows, and your per diem interest, total. That covers the estimated cost worksheet. Please contact me with any other questions. Thank you.