Typical closing costs on New home (sales, homeowners association, insurance)

[cduser01]

Hi, I was under the impression that most new homes have the closing costs covered by the seller/builder. Apparently it is not so.

1. What are the options to avoid or reduce the closing costs. Any suggestions.

2. What are the typical closing costs (as a percentage of home price)?

[beilart]

Closing costs are paid by the buyer unless you make a deal with the seller to pay part of them instead of lowering the price. If you are looking to purchase a home that is 350K you might ask that the seller pay a percentage of your closing. Sometimes they will, sometimes not. It depends on the price of the home and if the seller is in a hurry to get rid of the home.

[jelenap]

Some developers offer credit towards closing costs if you use their lender and title company. Although they can not force you to do that and, depending on your negotiation skills, you might be able to get something while using your lender of choice.

You can get a sample of closing costs from any lender, many have this information online. Here is just one recent sample I got from BofA for 350K home: $9366.50 - estimated closing costs; $4714.72 - estimated prepaid items/reserves (includes $2999.97 in county taxes).

Among other items, closing cost include $1225 state and $1750 county recordation tax. AFAIK first time home buyers are exempt from the state tax. Also this includes $1487.50 in points, not all lenders have that.

[Richard Martin]

MD closing costs are ridiculous compared to most other states. My house in MD cost the buyers close to $10,000 to close on. It cost me $300 to close on a similar house here in NC. I didn't have to pay finance points since I didn't get a mortgage.

[Sandee1213]

I just closed on a house in De. (new construction) and we paid a lot of money, close to 13k. It was a big house though. Closing costs are high here, but taxes are just so low.

[AlicynD]

Closing costs are made up of: Lender's Fees (Points, Administration Fees, Appraisal Fees), Transfer and Recordation Charges, Title Service Charges, Escrows for Taxes/Homeowners Insurance, Homeowners Association Pro-rations, some Inspections, etc.

The amount of closing costs will vary based on: Sales Price, Lender (Different lenders charge different fees), Transfer and Recordation Charges (% of sales price and varies in each county/city, first time home buyers in MD have a partial exemption for state), Homeowners Insurance, Taxes for the Property, Title Service Charges. If you have a Lender and Title Co selected, they should be able to give you a Good Faith Estimate on what your charges at settlement will be, including your downpayment.

Some Sellers/Builders will give "Closing Help". The amount of closing help is limited by 1) What the Seller/Builder is willing to give and 2) What your loan allows for.

For example, with an FHA loan, a Seller is allowed to contribute up to 6% (or whichever the Lender allows for - if your closing costs are less than the "closing cost help" you do not get to keep the change...) of the sales price towards a Buyer's closing costs. Ex. House is $300,000 then a Seller "can" contribute UP to $18K. Requesting 6% is the allowable for FHA...it is around 3% or lower for other types of loans. FHA has actually decided that they will be reducing allowable closing costs beginning in the next couple of weeks to only 3%. ALSO, up front Mortgage Insurance Premium for FHA is also increasing in the next couple of weeks. Buy now!