Closing Costs:  A Crash Course

Closing costs.  Unless you’ve been involved in several real estate transactions, or you work in the field of real estate, you may not understand exactly what closing costs entail.  You’re not alone, as these costs can be confusing to those not in the know.  Here’s a crash course of these omnipresent real estate transaction fees:

glendale green areaTo state it simply, closing costs are the additional fees associated with processing the mortgage.  These fees, however, are not paid to the mortgage company.  The bulk of closing costs is comprised of lender’s fees.  These fees include the appraisal fee, which is an independent assessment of the value of the property being purchased, as well as the credit report and any property taxes.  Lender’s fees also include mortgage and homeowner’s insurance, as well as any flood certification and pre-paid interest charges.  These fees may also include origination and discount points depending on your lender, as well as loan application and loan processing fees.  As a general rule, closing costs are assumed by the buyer of the property (VA mortgages are one exception to this rule) and are paid at the time of closing of escrow.

HOA transfer fees and HOA dues are typically also included within closing costs.  Title fees are also part of closing costs.  These fees include the title service fee, which covers the handling of title documents and funds, as well as half of the settlement and escrow fees, which cover the fees for the title search and examination.  Finally, title fees also include any title insurance.   Recording fees are another part of closing costs and include recording fees, transfer taxes and an affidavit of property value.

While this is by no means an exhaustive list of the transaction fees considered to be closing costs, I hope this has shed some light on this part of real estate transactions.  While every transaction is different, I look forward to helping you navigate your own real estate transaction as easily and simply as possible.

Why Buy Instead of Rent in the Northwest Valley?

Real estate experts are heralding the return of a stronger real estate market, post the 2007 recession.  Therefore, nowadays more people are choosing to buy homes instead of rent homes.  Arguably, while there are several advantages to renting a home such as reduced maintenance costs and insurance, there are even more reasons to purchase a home.

Easy Luxury Fixes Buyers LoveBuilding equity is a strong financial reason to purchase a home as it will likely increase in value, and you will eventually own your home outright.  According to a study conducted by Trulia.com, on average it is 20 percent cheaper in the Phoenix area to buy versus rent.  The main reasons for this are the rising costs of rents and declining mortgage rates.  (http://www.trulia.com/blog/trends/rent-vs-buy-q3-2014/).

Furthermore, thanks to different loan programs such as VA, USDA and FHA loans, as well as down-payment assistance programs, it can be cheaper in the long run to buy a home.  Monthly mortgage payments are usually less than the cost of rent, and these payments are tax deductible as you are able to declare interest costs in carrying a home loan.  Making your monthly payments on time also translates into a better credit rating.  Finally, with regard to financial considerations, a fixed mortgage will ensure your monthly payment is the same, as opposed to potential annual increases in rent.

Finally, if you own your own home you are free to decorate or remodel your home in any way you so choose, to reflect your own personal tastes.  Also, with fewer restrictions on things such as pets, your daily enjoyment of your home will be not be subject to someone else’s rules.

Please contact me for even more reasons for you to consider purchasing your own home in the Northwest Valley.