Spring is here. The Valley seems as healthy as ever; spring training is in full swing, the Final Four is on its way and last month the Phoenix Open set records for attendance. With all these people in town of course Real Estate is churning. Values are up. inventory is low, interest rates are still cheap and the investment markets are strong.
Along those lines, as more and more people enter into these transactions, it’s important to keep your eyes pealed and your head on a swivel. Just happened on a website by Quicken Loans. Read a passage about ‘closing costs.’ As follows:
“A misconception about mortgage closing costs is that they all go to the lender, when in reality, many costs are related to services performed by others. Mortgage closing costs cover expenses associated with getting a home loan, from inspections and appraisals to title insurance, taxes and more.”
The second sentence where it states, “Mortgage closing costs cover expenses…”
Trust me, I’m shooting you straight when I say, ‘inspections, title insurance and taxes’ are separate costs that you will pay before or at the close of escrow. They are not part of the closing costs associated with your loan. The appraisal is, but nothing else is on the list from Quicken.
Not trying to make trouble here or throw Quicken under the bus, but there are fees all over the purchase of a home, so let’s keep it honest. The inspection will run 300 – 500. Possibly you friendly realtor will take care of that cost (always a courtesy to my clients). Title insurance is about 1000 – 1300. And a buyer can end up owing up to a half year in taxes, 1000 – 2000. On the average 300k transaction, a buyer with financing is looking at 2000 – 3000 in costs in addition to the 3000 – 5000 in closing the loan from the lender.
The other reality, a company like Quicken is going to have extra fees. Their whole marketing campaign is directed toward making the consumer think they are sort of ‘fast forwarding’ through the loan process. Of course that will cost a little extra. But really they aren’t doing anything different than other lenders. Here’s the deal, find an independent mortgage broker who can shop a few lenders and find you a good rate with reasonable closing costs. Done.
Buying a home is not cheap. Even with all the lending incentives available, it’s going to cost 8 – 12k on the front end of the transaction. So get with your friendly realtor and go over everything in advance. The fewer surprises the better eh?
Going back to ‘keeping your head on a swivel.’ With the warm weather descending on us, starting to see some snakes. Saw 2 last week. Think the best rule of thumb is to just sort of pretend they aren’t around and you’ll be fine. You know, ‘hear no evil see no evil.’ Works for me.
Hope you don’t get bitten.