Hello, everyone and welcome back to a new video. Now again, I'm a mortgage guy and a Z. So I get this question all the time like almost on every single file that I do and it's how do you estimate closing costs? How much are my closing costs? Gon na be when I go to buy a home, and I get it believe me, everyone wants to know specifically how much they need to bring to the table down to the penny, and I get why you know you need to budget everything like that. So today, we're gon na do just that.

I'm gon na be telling you how you can estimate your closing costs on your specific home that you're looking to get, and also I'm going to tell you how you can save a little bit of extra money. Okay. So, first of all, everyone is gon na be telling you closing. Costs are gon na vary anywhere between 2 to 5 % of the purchase price of the home, you're gon na buy, which isn't a bad guess, but leaves so much room for uncertainty.

If you buy a $ 200,000 home, your closing cost could either be 4 grand or they could be 10 grand, which is significantly different, which means it's kind of useless, but to understand specifically how much you're gon na be paying at the closing table. You need to understand, what's all involved with closing costs, so this is an example of some general closing costs and typically what it would look like if you go to buy home so, first and foremost, depending on your lender, you're going to have your origination charges so Line 1 is the origination charge gain 99.9 % of lenders will be charging you anywhere from like $ 750 to $ 3,000 for this okay. So this is essentially part of the lenders. Compensation emphasis on part of it now really quick lenders get paid 1 to 2 %, usually of the loan amount, because they're bringing that loan to the bank or the investor who's gon na be making money off the loan from actually servicing it.

So this extra loan origination charge is kind of BS and it's just like a little cherry on the top to the lenders, compensation. What it is, what it is and that's why I myself and the company actually work for we don't charge a penny in loan, origination fees and honest lands, up saving buyers. So much money and, to be honest, you know we're a smaller company. We don't have as much overhead.

We make a little bit less on every deal that we do, but ultimately the people we work with are actually saving so much more money, so it makes it worth it in the long run - and this is important, because this is one of the most expensive closing Costs you will be paying. Is the loan origination charges so by having zero? It makes a big deal, but anyway, the next charge that you'd kind of see on there is points which is pretty much how much money you are willing to spend on your rate. Basically, now good lenders are gon na, be quoting you at par rate. So if they say hey, your interest rate is 4 %.

That would be 4 % without paying any money or getting any money back. So if you want to buy that rate down, you can - and this is where it would show up on the closing statement - you would be buying that rate down. So let's say at 3.5 % interest rate, but you're gon na be paying you know $ 1,000, maybe even more than that to get that rate. Now, on the flip side, you can do the opposite.

Instead of that 4 % rate, you can go ahead and take a 4.5 % rate and then get some money back to help you with your closing costs. It's ultimately up to you, then next you've got your services that you can't shop for. Okay, so some examples are like the appraisal, a credit report flood sir debt cetera et cetera, and these fees vary. I mean I get asked all the time.

How much is the appraisal going to be, and ultimately, it's gon na vary anywhere from like 300, I've seen at the lowest to as high as like, 800, maybe 900 on the really high-end homes, but really it's gon na vary it's very hard to give you a Specific number down to the penny, this, what your appraisal is gon na, be where your appraiser will be about that range. You can't really shop for that to get a better deal on it. It just it is what it is same thing with the credit report of the flood cert it's just kind of like it is what it is, but then you've got services that you actually can shop for, and these are the type of things you know we're talking Like title insurance, home inspection, any other type of closing fees with title and whatnot, like these fees, vary a ton, but you can actually shop around to try to get the better prices on them. So you can save yourself a little bit extra money or you can just kind of save yourself some time and say: okay, whatever you guys recommend I'm good with, but those are essentially all of your loan costs.

Okay, let's call it like 1,300 bucks, okay on average. Let's call it 39 bucks, those are your loan cost and then you've got your other costs, which are a little bit scary. Now that I'm saying that there's just a section on there, just throwing costs just like other costs, but these costs are like tax and government fees and prepaids and whatever else they want to slap you with all right. So the important cost to take note of here or your prepaid say you know you have to pay taxes and insurance upfront now, depending on the time of year and where you are geographically okay, these can vary a ton as well.

So if you close towards the end of the month, your prepaids are typically a little bit cheaper right and, if you close towards the beginning of the month, a little bit more expensive, but at the end of the day, you're paying the same amount. It's just essentially how much you're paying at closing versus how much you're paying over the course of like a year, but the prepaids are also one of the most expensive parts of the closing costs, and you can actually determine your prepaids very specifically. If you actually take the property, you want to get look up the taxes on that get a quote on insurance and really get some definite numbers and do some math on it. But it's a lot of work and most people don't do it.

So that's why they always estimate the Oh two percent closing costs, but, like ultimately, that's essentially everything. That's on a closing statement in terms of like your closing costs and really it's hard, because two different deals can be completely different. I mean completely different. So it's hard! That's why no one ever says: hey your closing.

Costs are gon na, be four thousand five hundred thirty-two dollars and twenty-nine cents like you're. Never gon na see that full amount until the very end when you're about to sign right, but you're gon na have a very good gauge of hey we're gon na be about this number, maybe give or take like three four hundred bucks we're gon na be about This number now I will say that the things you want to really drill down on to make sure you're not getting screwed is gon na, be your loan origination charges. You really want to pay attention to that. If you see some unnecessary discount points being charged or you see, some unnecessary fees being charged mean they'll, throw tons of stuff in that section, make sure you drill down on that and make sure you also drill down on the other cost section.

Sometimes they throw in some random fees that aren't necessarily, you know important and like mandatory. So you want to make sure you take a look at those and go. I don't really need these, and maybe I don't want these and throw these out and, if you're looking to save the most money, those are the two things I always recommend you take a look at now. I also want to add really quick that when you get a loan estimate right, it's gon na be usually most lenders.

You're, not oh, not every lender, but most lenders are gon na, be you know very conservative with it. There give you the highest cost that it might be for an appraisal or the highest cost for a credit report or the highest cost for taxes insurance. All these kind of things. They always want you to say hey.

This is what your loan estimate is, that it may be $ 5,000 in closing costs. Let's call it, but really what it's probably gon na be is like four thousand, but it's better to tell someone hey it's gon na be five thousand and then at the closing table it's four thousand versus hey, it's four thousand and then at the closing table. It's five thousand, so you always want to overestimate with these things, but you should definitely take a look at the loan charges because those really won't change at all. Okay.

So if you're seeing discount points or you're seeing loan origination charges like underwriting fees, processing fees, application fees, honor, they throw tons of stuff onto that section - make sure you really drill down on those and make sure those are actually necessary to get your loan done. But again, a good gauge for this entire thing is to take your purchase price if you're buying a $ 200,000 home. Take two percent of that amount and that's going to be your base closing cost, no matter really what you do, what you shop for, where you go. Even if you worked with someone like us, where we don't have any loan origination, charges, which is rare, you're still going to be paying about two percent and closing costs because of your prepaids and your appraisal, and all these other things.

So I always say start with two percent you're pretty much, definitely going to be paying two percent and then, depending on your loan estimate or depending on what other charges you have in the other costs and in the loan origination costs. That's where you start kind of adding on from there two percent, plus whatever is under loan costs and whatever is under other costs that you really don't think is necessary. That's where things start getting expensive. That's why? I always people say: hey it's two to five percent you're working with an expensive lender, you're looking at five percent you're, looking at a cheap blender, two percent, and hopefully that made sense and you're not alone, if you're always looking up or asking like how much is Closing costs, it is a normal thing, not just buyers asking me these things.

Real estate agents ask all the time, because it varies so much it's so hard to give an exact number of closing costs, because it varies a ton and really drill down on your lender. So many of them charge unnecessary fees. I cannot say it enough, but okay, that is closing costs in a nutshell. Again, hopefully you learn something new again, I'm a mortgage guy in AZ.

So if you aren't easy, you have any questions you want to hit me up. Anything like that head on over to lending Shawn Malka com+. I've also got some really great, informative videos on there when it comes down to the home, buying process and really everything that's going on, but again hopefully enjoyed this video. If you did I'd really appreciate if you can hit that like button also subscribe for some more content, but ultimately I hope you feel a little bit more comfortable now with closing costs and until next time I will see you in the next video.