You hear a lot about Down Payment but what about Closing Costs? They are, in fact, two separate charges and both are ultimately the responsibility of the Home Buyer. When you first make a plan to purchase a home, you want to have a conversation with a qualified and local Mortgage Lender who can give you an your maximum purchase price based on how much you want to spend or are qualified for, your anticipated rate, monthly payment, and any fees associated with purchasing. This is called the Buyer's Estimated Purchasing Costs or Good Faith Estimate.
The Down Payment is your "skin in the game", the amount you are putting forward out of your own savings or IRA to secure the loan. Closing Costs are the miscellaneous fees associated creating the loan. These can include lender fees, title fees, processing fees, surveys, prorated taxes, Homeowner Association or Condo Fees, and water escrows.
In our area, closing costs are an average of 5-6% of the total loan amount. The lower the purchase price of the home, for example under $250,000, the higher the costs to close. The good news? You typically are not responsible for the entirety of this bill: you can ask for the Seller to cover a portion or all of your closing costs! Having the Seller cover 100% of your closing costs is very rare in this market, but you can usually anticipate for them to chip in 3-4%. Remember- the more a Seller gives back to the buyer, the lower their net profit. Sometimes they cannot, or are unwilling to, give closing help in excess of 3%.
If you are a First Time Home Buyer in Maryland, and especially in Prince George's County, you may qualify for Assistance to cover your Down Payment and a portion of your closing costs. When you don't have to go to the Seller for more money, that creates a huge advantage and incentive for the Seller to accept your offer over other less competitive offers. I've had Buyers get to the closing table without having to bring any additional funds to close on their home!
Some Special Cases:
- Some areas in Maryland have access to the USDA 100% Financing Loan which allows you to finance both your Down Payment and any Closing Costs not covered by the Seller into the loan.
- When you are making an offer on a Short Sale or Bank-Owned Foreclosure, the banks will typically only allow 2-3% Closing Help max. It's one of the downfalls of getting such a great deal on the sales price of the home.
- VA Buyers can also finance their Down Payment and Closing Costs into their loan. The goal is to come to the table with as little money as possible- even receive your Earnest Money Deposit back at closing!
Want to learn more or chat with a Lender? Call me today at 443-532-8917 so we can get you started on the right path to Homeownership without any surprises!
Dunkirk MD Homes for Sale - Genna Fleming, REALTOR® at EXIT 1 STOP REALTY
You now have free access to my Real Estate Search Engine! I am your local real estate expert with the knowledge and experience to deliver the unsurpassed service you deserve. Local Specialties: Upper Marlboro, Lanham, Lothian, Edgewater, Annapolis, & Dunkirk. Call Genna Fleming at (443) 532-8917 or follow my real estate adventures on Instagram @askgenna