Closing Costs for First Time Home Buyers

First Time Home Buyers in North Carolina know that NOW is a great time to buy a house, and many are busy saving up!  Congratulations!  The folks we are talking to want to know more about programs that can help them with down payment and Closing Costs for First Time Home Buyers.

The Downpayment part is pretty easy.  There are 3 or 4 programs in NC that offer little to no down payment and we covered them in this comparision.

The Closing Costs are a little bit different.  The cost of buying a home generally falls within 3 “buckets.”  The first part, of course is the downpayment.  The second part are the costs associated with the actual Mortgage, these are typically referred to as Closing Costs.  Then the final part are the costs associated with the Property, these are generally lumped into the “term” Prepaid Items.

Since every player on your real estate home buying support team has a stake in your transaction, it’s a good idea to know how to budget for their services.  Understand that some of the Closings Costs are generally paid for BEFORE closing.

In most Cases the estimated fees for each item may have been purposely left – this is because an Inspection of a New Construction 1500 square foot house (for instance) will be substantially different for a 72 year old 3000 square foot rambler that needs repairs!

Common Out Of Pocket Expenses To Budget For:

Home Inspection-

This is usually money well spent since the inspector will evaluate many aspects of your new home to ensure all systems are functioning as they are intended to.  Remember – you are paying this person to find problems… so there will likely NEVER be a house that passes with flying colors!  I would budget at least $400 for the Inspection of a “regular” home. Using a Real Estate Agent who can help you negotiate any of the Seller Repairs… is obviously to your advantage!

Condominium Questionnaire Fees-

This may be required by your lender, and can take up to 30 days to receive.  Fees can range anywhere from $0 to $300 depending on the complex.

Well and Septic Certifications-

If your new home has either of these systems you will want to be sure that they are functioning properly.

Survey-

This document outlines the borders of your property, and the price can vary depending on the size of the lot and if it was actually staked out.  A survey is not a requirement for all purchase transactions.

Appraisal –

Depending on your state, loan size, property type, loan program and lender, the appraisal may need to be paid upfront, in addition to the Credit Report.  This is normally between $350 and $450

Termite Report – 

In North Carolina it is ALWAYS a good idea to get a Termite Report.  The VA requires that these reports be included on the HUD-1, but most other programs do not. If there’s evidence of ACTIVE termites, it must be fixed prior to closing.

A typical purchase transaction will involve some, but not necessarily all of these services.  It’s important to discuss any other potential out of pocket expenses with your agent and loan officer, since some of these items may not be included on the initial Good Faith Estimate.  It’s also important to keep in mind what you want to know prior to the end of your Due Diligence Period, when you might not be able to get Earnest Money back.

The important thing to realize is that the vendors providing these services will expect to get paid whether or not your transaction closes, and they may ask that you pay when services are rendered.  A combination of just a few of these fees could easily add up to over $1,000 so it is important to have the funds set aside at the start of the process.  If the Seller is paying the Closing costs… you need to address these upfront costs with them.

Do you have more questions about Closing Costs for First Time Home Buyers?  Just leave a note below or give us a call!

Looking for BASIC FHA Underwriting Guidelines in NC?  We can help!  Want to know more about how to purchase a Foreclosed Home in North Carolina?  We’d love to talk to you about how to make this work!  Please call Steve Thorne, Mortgage Banker in Cary 919-649-5058.  We have NC Housing Finance Agency money available to work with FHA mortgage loans too!