Skip to main content

What Funds are Needed at the Time of Closing?


What Funds are Needed at the Time of Closing?

     Most new mortgage clients I speak with have pretty basic concerns regarding their upcoming financing.  One of the questions I hear most often is ...

     How much money will I need at my Closing?

 Get a Quote!     A simple and quick answer might be provided by the following math equation:

Down Payment + Closing Costs/Pre-Paids 
= 
Total Funds to Close

     But unfortunately, it's typically not that simple. Here's why ...  

     While the above equation is an appropriate starting point for buyers/borrowers, the actual amount of funds needed at the time of Closing often decreases during the time of mortgage processing.  

     How?  Often, during the processing of a mortgage or prior to Closing taking place, some items or fees get paid for.  

     Two (2) such fees are:
  1. The Appraisal Fee
  2. The Homeowner's Insurance First-year Premium
     
     Other items and services may also be accounted for AT CLOSING, in the form of Credits due from the Seller:  

     Examples of these include:
  • Real Estate Taxes (Due from the seller)
  • Earnest Money paid (Essentially, an advance towards the down payment, paid by Buyer)
  • The Seller's Portion of Title Insurance (in some States) 

     The amount you owe at the time of Closing can also fall should the following items be applied towards Closing Costs/Pre-paids:
  • Seller Credit
  • Lender Credit
     
     As you can see, the simple equation provided above becomes much more complicated as your mortgage progresses.  While the down payment portion of the equation typically remains pretty straightforward, the amount owed for additional fees can change ... or be decided upon ... as your mortgage process progresses.  

     Once those decisions are made, the monetary difference that remains is funded either by the Loan Amount requested or ... you guessed it ... via another equation:

Purchase Price - Loan Amount =  Down Payment

     Below you'll find examples of the Closing Costs you might encounter.  (Costs vary by State and/or Mortgage Lender.  Talk to me to receive definitive Costs for your Chicagoland/IL/WI financing.)     
     
     Examples of Closing Costs followed by the Entity charging those fees :

 Document Checklist
  • Appraisal Fee - Borrower (Pre-Pays Lender @ Application)
  • Real Estate Transfer Taxes - Per RE Contract (IF paid) (Paid @ Closing)
  • Escrow/Settlement Fee - Title Company (Paid @ Closing)
  • Title Insurance - Title Company (Paid @ Closing
  • Recording Fees (Mortgage, Deed) - Title Company - (Paid @ Closing)
  • Attorney Fees (In certain States) - Attorney (Paid @ Closing)
  • Flood Certification Fee - Lender (Paid @ Closing)
  • Origination Fee - Lender  (Paid @ Closing)
  • Credit Report Fee - Lender (Paid @ Closing)
  • Processing Fee - Lender  (Paid @ Closing)
  • Underwriting Fee - Lender  (Paid @ Closing)
  • Discount Points (IF paid) - Lender  (Paid @ Closing)     

     Pre-Paid Items include:
  • 1st Year Homeowners Insurance Premium
  • Impounds for Real Estate Taxes and Insurance
  • Homeowners Association Dues (IF applicable)
  • Interest Charges (Varies with Closing Date)
  • Mortgage Insurance (IF applicable)


     Once again, the lists above aren't an all-inclusive list of what you as a Buyer/Borrower might encounter in your individual transaction.  Local or state practices may add or subtract to the costs presented here.      

     But the lists make one point very clear:  Borrowers need to be aware that there will be extra costs that accompany buying their home beyond their down payment and future monthly mortgage payments.  And they need to plan for them.

     There are several different ways to do that. That's where I (your Mortgage Originator) come in. 

     Prior to entering into a Real Estate Contract:  Contact me.  We will discuss all options available to you.  That way you know and thoroughly understand the costs needed when you buy and finance a home ... and you can make the wisest decisions moving forward.  

     No surprises encountered.  Just a stress-free and successful home buying and Closing experience ...



    
     * Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:


Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

American Portfolio Mortgage Corp.
nmls #175656

Direct: 815.524.2280
Cell or Text: 708.921.6331
eFax: 815.524.2281

 

  Twitter Account of Gene Mundt, Mortgage Lender   LinkedIn Account of Gene Mundt, Mortgage Lender   Facebook Acct. of Gene Mundt, Mortgage Lender   Pinterest Acct. of Gene Mundt, Mortgage Lender   
 Trulia Acct. of Gene Mundt, Mortgage Lender   Zillow Acct. of Gene Mundt, Mortgage Lender        Gene's Chicagoland Blog/Gene Mundt, Mortgage Lender 

Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, 
Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
Cook County, and elsewhere within IL & WI.


Referrals are Welcomed!
      


     

     

Comments

Popular posts from this blog

Love Your New Construction .. But Educate Yourself About Future Tax Bills

Love Your New Construction ... But Educate Yourself About Future Tax Bills

*I want to preface this article by saying it's geography specific to the Chicagoland Area and its collar counties ...


So you've opted for building or buying a newly constructed home ... 

You've decided you'll invest most, or all, of your savings to cover Down Payment and Closing Costs.After all, it's a new home, you hopefully won't need money for repairs or improvements for quite a while, right?  

Plus:  The property taxes for your newly constructed home will initially be lower, as they'll be based upon the vacant lot on which your new home is built.  (The new home wasn't completed yet for the previous tax year's bill.) 

But how does this affectyour future tax bill and the tax portion of your monthly mortgage escrow payment?

When obtaining financing:  During your first year of a new construction occupancy, the real estate tax portion of your escrow account is based upon the last av…

Property Addresses: Gettin' Down to the Nitty Gritty

Property Addresses:   Gettin' Down to the Nitty Gritty

Take just a second and read through the following statements ...


“The devil is in the details” 
... "in life, it is often the tiny details that end up 
being the most important"

"Get Down To The Nitty Gritty"

“Little details have special talents in 
creating big problems!” 

“Sweat the details”

"Success is the sum of details"

Details ...Details ... it's all about the details ...
     And I'll admit it, I'm a bit of a nerd about them.  My whole family is.  Details, the intricacies, the little things ... they matter to us.
When I was growing up, a typical conversation (and argument) between my brothers and myself at the dinner table or in the backyard centered around "details".  It didn't matter what the topic was, it was the minor differences ... the details about the topic ... that we argued about.  I'm sure we drove our parents crazy.  
Sports statistics and games ... minutiae rega…

Ready for Fall? It's Arriving Soon

Ready for Fall?  It's Arriving Soon

Friend ...

Maybe it's because football season has started. Maybe it's the kids being back in school. Or because the night air is cooler. But a sense of Fall has arrived here in Chicagoland ...

The Fall Season brings changes with it. Changes in temperatures. Changes to the clothing we wear. Our focus seems to shift with the coming of shorter days, falling leaves, and crisp air.

Fall can be the perfect time to do a multitude of things. You can prep your home for the upcoming winter weather ... or for Fall listing and sale. 

But whether you're moving on or staying put, Fall is a great time to declutter and organize your home inside and out ... and your finances too.

I've googled like crazy to find interesting articles filled with Fall info, ideas, tips, and photos. Articles that will help you usher the Fall Season in at your house. I hope you enjoy reading the articles offered below and that they inspire you to make any needed changes.

Rem…