#94 Monday Morning Mortgage Tip: Barb Adelaine with BankStar

Posted by Shane Andersen on Tuesday, July 23rd, 2019 at 8:06am.

Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Barb Adelaine from BankStar. Today, she expanded on the different closing costs for buyers.  You can reach Barb at 605.696.8562 or barb.adelaine@bankstar.com.  Her office is located at 1301 6th St., Brookings SD 57006 or on the web at www.ebankstar.com 

 

Buyer's Closing Costs

 

- Good morning everybody, Shane here from the Brookings Home Team, powered by Century 21. Monday morning again. I can't believe the weekends, they just fly on by anymore. So it is Monday morning. I got Barb here with Bank Star, which means it's Monday Morning Mortgage Tip. As you can see right behind us, 8:15, we're not lying, it's 8:15 here. We are ready to go for our Monday Morning Mortgage tip. So as you guys jump on here please let us know. Give us a heart, give us a thumbs up. We would like to see who all jumps on here. And of course if you have any questions for us please let us know, and we'd love to answer those on our next episode. But right now Barb's got a tip for us, and can't wait to hear what you got.

- Thanks.

- So throw it away.

- Buyers recently have been a little nervous or concerned about how much money they're gonna need. They understand the programs pretty well, but they are nervous about how much cash does that mean for me. So I'd like to kind of explain to you about closing costs. Closing costs are kind of a series of things. There's a cost to your bank. Here it's typical for most banks to charge a one percent of your loan amount as they loan origination fee. There could be some underwriting fees or processing fees, depending on the program you choose and the bank you're at. But there's a section that's for the bank charges. And then there's a section for things that you need for your file, in order to get your loan approved. So that'll be things like your credit report, figuring out if your property's in the flood zone. Any surveys or things that need to be done that are a third party kind of a business like that. And of course included in that is gonna be title insurance. The title companies have a big part to play in what we do. So they go to the court house and search for all the records of the property that you're buying and there's a fee for that. And then you're buying insurance, just like car insurance. So there's a fee for the insurance portion. You're buying enough to cover your value, so that's your part. And then the bank needs some coverage too, so there's a second little section, not as expensive, for the bank. Then there's a closing fee with them. So that sounds confusing, two things named closing. We try to call it settlement sometimes now, but most everybody knows that's the day you go sign everything, the closing. And there is a charge for that. They do a lot of work and make sure everything gets filed properly at the courthouse so it becomes your house. So that's important. And of course even the courthouse charges for filing that stuff to make your legal documents of record.

So there's a whole bunch of things that get added up to be closing costs. And then you're gonna hear right after that about prepaid items. And you're like oh great something else, now what is that? So that is you need to buy insurance on this new house and the bank's gonna want it to be insured the day you buy it. And we would like your insurance to be for a whole year. So you pay for a whole year's insurance the day you buy the house, and then if you're escrowing you're also putting a little bit into escrow because every house payment includes a little bit for taxes and insurance that we tuck away so we have enough next year to pay the bill when it's due again.

The taxes depends on what month you're in, what time of year it is, how much we need to put in your escrow account. Taxes are due in April and October. So if you close in September you need a lot 'cause next month we have to pay six months worth of bill. But if you closed in November we got a long time to get it put together before the next April. So that's why it's different depending on what month you're closing in. That will pretty much wrap it up. I'd say on average, the average house, you're probably looking at four to $5,000 in those kinds of costs. And then you still have your down payment. So depending on how much your down payment was that would add into that. So some people get really nervous, that seems like a big number. But there's a few things that happen that might help. So you might negotiate when you make your offer that the seller split some of these costs with you. And those are typically the title insurance company costs for both insurance and maybe for the closing. And then if you're buying an existing home, this doesn't work for brand new ones, but for an existing home, they owe taxes from last year still on that house and however far we are in the current year. So you'll get about what a year's taxes are as a credit to you from the seller, and that's a big number that usually we can subject off. Those brand new houses won't work that way though because last year they were just dirt. So they, you might get $20 or something, and that's about it. So a brand new house, little more cash has to be collected up front.

- Perfect. All right. Lot of information.

- Yeah.

- A lot of numbers. And they do do a, we'll just call it a settlement.

- An estimate.

- Estimate. You should get an estimate from them, generally after you're pre-approved and everything so you know exactly what your estimate will be for your closing cost. And she said about four to $5,000. I always say about 3% of your purchase price is roughly-

- Great.

- Kind of where you'd be at. Sometimes that's high, but I'd rather be on the high side. Lot of great information. Hey, good morning Terry, thanks for jumping on here. If you guys have any questions, like I said, let us know. We would love to answer those on our next episode. And thanks again for watching today's Monday Morning Mortgage Tip. We will be back next Monday for a new tip for you guys. Enjoy your week. Thanks for watching. And have a great day. We'll see you guys soon.

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