Closing costs are a list of charges you will have to pay on the closing date that is set for your Columbia SC home. Many people are surprised at the additional costs over and above the price of the home.
Closing costs will vary from area to area, but a good rule of thumb is to plan for at least 1.5% of the purchase price for closing costs in addition to the down payment. It’s not a bad idea to allow 2.5% for closing costs, just to be on the safe side.
Closing Costs Broken Down
Here are some of the closing costs you may encounter depending on your specific situation. Use this as a guideline then talk with your lawyer or closing agent, who can provide a more realistic estimate for your situation.
Land Survey Fee or Title Insurance Fee
A recent survey of the property is usually required by lenders. If one is not available the cost can range between $600 – $900 for a new survey. In lieu of the survey most lenders today will accept title insurance which can cost considerably less.
Appraisal Fee
An appraisal provides the lender with a professional opinion of the market value of your Columbia SC home. This cost is normally the responsibility of the homeowner and it can cost between $200 and $500.
Home Inspection
A professional inspection of the home, top to bottom, is for the benefit of the buyer. A home inspection can cost anywhere from $250 – $400 and is well worth the investment. When hiring a home inspector make sure the inspector has liability insurance just in case they overlook something.
Homeowner Insurance
Mortgage lenders require a certificate of insurance to be in place from the time you take possession of the home. The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality.
Mortgage Insurance
If your mortgage is insured, you will be required to pay the applicable taxes on the insurance premium at closing. While the insurance premium can be added to the mortgage amount, the tax must be paid at closing, where applicable.
Land Transfer Tax
Most provinces charge a land transfer tax payable by the purchaser. The amount varies depending on the province. Land transfer tax is based on the purchase price. First time home buyers purchasing a new or re-sale home may be entitled to a refund.
Legal Costs and Disbursements
Lawyers and notaries charge fees for their services involved in preparing the deed, preparing the mortgage, and conducting the various searches. Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies.
Closing Adjustments
An estimate should be made for closing adjustments for bills the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser. A lawyer will let you know what they are once research has been completed. You will be given what is known as a “Good Faith Estimate” of closing costs prior to your closing so you will know exactly how much money you’ll need to bring to closing.
If you have any questions about closing costs on your Columbia SC home, just use the comment box below or click over to our website and contact us there.
Not long ago, buying a Columbia SC home was the best investment you could make. Not only did it provide a place to live, but it provided instant wealth for many homeowners through rapid home-price appreciation. Renting seemed risky. If you didn’t own a Columbia SC home, you’d miss out on equity buildup that would bankroll a move to a bigger, better home.
In this market, the realistic way to look at buying a Columbia SC home is to secure a place you want to live. Buying a Columbia SC home doesn’t guarantee you’ll make a big return on your investment. You might if you stay long enough. Over the long term, home-price appreciation usually outpaces the inflation rate. However, this varies from one locale to the next.
If Your Columbia SC Home Doesn’t Work Out
If you buy a Columbia SC home that you find out doesn’t work for you and sell it again within a year or so, there’s a chance you’ll lose money when you take into account the costs of buying and selling.
No one knows for sure when the economy will substantially improve. Last year, some economists predicted a double-dip recession. That appears to be less risky at the moment. In the fourth quarter of 2011, the nation’s economic output grew at an annualized rate of 2.8 percent, which is not recession territory, but is not considered good enough by some economists.
Columbia SC Home Market Prediction
Will 2012 be the turnaround year for housing? Lawrence Yun, the National Association of Realtor’s (NAR) chief economist, thinks that the combination of increasing home sales, record-low interest rate and low home prices “demonstrates a market in recovery.”
Other good news for anyone thinking of buying a Columbia SC home is the recent increase in consumer confidence and the decrease in the inventory of homes for sale to a level not seen since March 2005, according to NAR. Yun thinks the drop in inventory will contribute to price stabilization and possible modest price growth in the near future.
Problems for Columbia SC Home Buyers
There is pent-up demand on both the buy and sell side. One problem for those considering buying a Columbia SC home has been the lack of quality inventory. That may improve this year as some sellers decide they’re tired of waiting for a better time to sell.
Buyers have the advantage of low interest rates and home prices. Buyers considering buying a Columbia SC home who can find the right house and stay put for five to 10 years will probably be happy they bought now.
When buying a Columbia SC home, you’ll need a large sum of money, and not everyone can afford to pay cash when buying a home. The majority of home buyers need a mortgage to fund the purchase. The buyer would then pay off the debt within a fixed time set by the lender.
Buying a Columbia SC Home – What to Look for in a Lender
There are a lot of lenders you can approach for a loan. They are not equal though so you’ll need to use care in choosing one. To pick the right lender, a home buyer has to keep in mind several things.
If you’re buying a Columbia SC home, one of the first things to look for in a loan is fixed interest rate. This will give you a good idea how much you will be paying off over the entire length of the loan, because it won’t change. You can then determine if you can afford the monthly payments.
In addition to making sure you get a fixed-rate mortgage when buying a Columbia SC home, shop for the best interest rate. Keep in mind, the lower the rate, the longer you’ll have to pay off the mortgage.
A low monthly payment may mean you will spend a long time paying off your mortgage but it will give you more money every month after paying off the mortgage. You never know when an emergency could crop up, and having a lower monthly payment leaves more you can save which can then be used for emergency situations.
Always look at the closing costs. Usually, this will be in the 2 to 3 percent range of the final selling price of the property you are buying. Obviously, the higher the closing cost, the less appealing the loan would be to any borrower.
Watch out for teaser interest rates. This means the lender would give you a low interest rate in the first years of the loan then hike it up in later years. If your financial capability does not improve, you could find yourself unable to afford the monthly payments.
By taking these things into account, you should be able to find the best lender to approach when buying a Columbia SC home. We can help you find a good lender if you find you’re not up for the challenge yourself.
You’ve been watching the Columbia SC real estate market for some time, and have decided you want to start thinking about buying your own home. Now what?
The first step is to get pre-qualified for a mortgage to give you an estimate of how much you can afford. Once you have an idea, you need to start thinking about saving for a down payment. Depending on the type of loan, you may need to save anywhere from 3% to 20% of the value of the home. Obviously, the larger the down payment, the lower the monthly payment will be.
Stay Motivated
Sometimes when you have a savings plan that could take years to complete, it can be hard to stay motivated. One way to stay on track is to visit open houses. Even if you’re not ready to buy just yet, you can see what you’ll be able to get when you reach your goal. It’s so much easier to stay motivated when you can start picturing yourself enjoying your new home.
Automate Your Savings
Nowadays it’s so easy to set up an automatic deposit into a savings account. You can set it up through your employer, by asking them to direct deposit a specific amount (or percentage) into a separate savings account. Some employers will even let you split your pay into three different accounts.
Or, you could also set up automatic transfers from your checking account to your savings fund. The benefit of doing this is that it would be easier to either cancel it (but you should avoid canceling this transfer, if possible) or changing the amounts.
Cut Out Un-Neccessary Spending
Almost every single article about saving money will tell you this. No need for me to explain in depth how little things add up. So, try to pack your lunch and reduce your daily, frivolous spending.
Look at ALL of Your Financing Options
You could tap into other resources you hadn’t thought about. For example, you could borrow from your 401k and pay a decent interest rate. Another option is to make a penalty-free withdrawal from your 401k or your IRA, if this is your first time buying a home. However, keep in mind you will have to pay taxes on the amount withdrawn.
If you have a Roth IRA, it’s even better. Since the money you put in this account has already been taxed, you don’t pay taxes on any withdrawals. Also, if this is your first home, Uncle Sam won’t penalize you for using these funds to buy a house either.
Of course, before you decide to do anything with your retirement funds, consult with your tax advisor.
Let Your Friends and Family Know About Your Plans
There are two reasons why this is important:
- With the holidays fast approaching, they will understand that you’re trying to save for a house and their gift expectations won’t be as high.
- You never know, they may even make a “donation” to your house fund for Christmas.
So there you go, some tips on how to make your goal of owning a Columbia SC home a reality.
Have any other tips? Please share them with us! Just click the comment link below and let us know your tips for saving that down payment.