How much are you paying in closing costs?

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Everyone knows foreclosures are a great way to get a house at a bit of a discount. However, often times banks will not pay any closing cost or if you ask for them, say up to 3% of purchase price, someone else may not and their offer will get accepted over yours. I have now seen these costs reach more than $4,500 on a $60k purchase, that is a big percentage.

So, I was wanting to ask all of you how much you typically see closing cost and maybe fill us in on the details of the loan (ie. conventional, FHA, owner occupied or investment property).

As for me, the loan I am currently acquiring is for a HUD/owner occupied/foreclosed home. My offer was accepted at $61k and the closing cost for my conventional loan at 4.85% with 5% down payment is projected to be $4,541!

Originally posted by @Dustin Little :

Everyone knows foreclosures are a great way to get a house at a bit of a discount. However, often times banks will not pay any closing cost or if you ask for them, say up to 3% of purchase price, someone else may not and their offer will get accepted over yours. I have now seen these costs reach more than $4,500 on a $60k purchase, that is a big percentage.

So, I was wanting to ask all of you how much you typically see closing cost and maybe fill us in on the details of the loan (ie. conventional, FHA, owner occupied or investment property).

As for me, the loan I am currently acquiring is for a HUD/owner occupied/foreclosed home. My offer was accepted at $61k and the closing cost for my conventional loan at 4.85% with 5% down payment is projected to be $4,541!

A lot of closing costs are local. And some depend on your down payment. And we have to define "closing cost."

For example, property taxes going into an impound account. That might be $5k. If you are making a substantial down payment, you can waive impounds. But all you're doing is kicking the can down the road; you should still set aside that $5k (or whatever the figure would have been) on your own. OK, with that in mind, are prepaid property taxes a "closing cost"?

Another one. Cross a city line and find yourself in Berkeley or Oakland in California. Those cities impose a massive transfer tax, about 14x the state's basic transfer tax. That's pretty clearly a closing cost. But if you're using some rule like "2% of the sales price," you will be in for a nasty surprise when one of the line items is 14 times higher than you expected.

And yet another. You initially want to put 10% down. Your lender lets you know there's a thing called upfront borrower paid PMI that would let you have a lower monthly payment. You decide to go that route, putting 5% down and paying that 2.3% fee to knock out the PMI. You've actually decreased your cash to close because 5%+2.3% is less than 10%. You intend to use some of the upfront savings to redo the kitchen in the in-law suite. You swapped monthly PMI for an upfront one-time fee, but this was optional and your choice, and you actually reduced your cash to close. With all that in mind, is that optional 2.3% that you opted into a "closing cost"?

Here's yet another one. FHA and VA loans have funding fees (unless you are a veteran with a service connected disability). 1.75% of the loan amount in the case of FHA. But it's typically tacked onto your loan balance, meaning it's not paid out of pocket. Is that a "closing cost"?

So I don't really have an answer for your question... I politely disagree with the question itself as too simplistic and over-generalized for any answers to be useful. :)