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What Are The HIDDEN Costs Of Buying A Home| Closing Costs Explained - YouTube
Channel: Living in Western Washington
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- Are you looking to buy a
home and you're wondering
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what are closing costs
and who pays for them?
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Well, that's what we're
gonna be talking about today,
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and we're gonna get
started right after this.
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(upbeat pop music)
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Hello, and welcome back to my channel.
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I'm Ledeana Strand with Homes By Strand
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in Port Orchard, Washington,
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and today we're gonna be
discussing closing costs
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and what they mean to you as a buyer.
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If you're watching this video,
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you're more than likely
about to purchase a home
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and maybe you're a first-time home buyer
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who's about to purchase your first home
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and you just figured out
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what the concept of closing costs are
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and maybe you're shocked
and a little bit stunned.
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I'm going to try to break it down
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and make the overarching concept
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a little less difficult to understand.
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So, closing costs in real estate
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are exactly the way they sound.
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You buy a home, you're gonna have to pay
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above the actual purchase amount.
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So, an example may be if you
paid $300,000 for a home,
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in order for that home to
change hands or become yours,
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you'll have to pay some
costs associated with this.
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Now, closing costs come
in mainly two parts,
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and that's going to be buyer closing costs
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and seller closing costs.
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Now, yes, the seller
actually incurs a cost too
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along with the buyer.
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Now, who incurs more and
who actually incurs what
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is going to depend mainly on your location
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and market conditions.
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In the state of Washington,
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the main closing costs for the seller
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are real estate brokerage commissions.
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And the buyer cost associated
with a piece of real estate
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is mainly going to come in the cost
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associated with obtaining
a mortgage, taxes,
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insurance, appraisal fees, et cetera.
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Now, the best piece of
advice I can give anybody
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if you want to figure out more accurately
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what closing costs are associated
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with buying a home in your area
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would be to ask a real
estate agent or a lender.
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A good way to look at it is closing costs
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will typically account for 1%
to 5% of the purchase price.
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Now, many people don't understand the why.
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Why are closing costs
associated with buying a home
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and why are they so expensive?
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And more importantly,
with things like Zillow,
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why do real estate agents
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and other people like this still exist?
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Well, on the surface a
real estate transaction
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can seem very simple.
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But underneath it, there's teams of people
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who are working 9-to-5 each
day, even on the weekends,
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to make sure a real
estate transaction closes
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and that there's less risk involved.
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And people don't like to work for free,
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so you actually have to pay these people.
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The other thing is that real
estate is in partnership
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with many industries.
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Like I said, you have financing,
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you have real estate
agents, title and escrow,
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inspectors, appraisers, et cetera.
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When it comes to the actual
mechanics of a house,
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it's very difficult for one
person in the transaction
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or a computer to know how
to do all these things,
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so each one of these people
must be separately paid.
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I'm just gonna go over the
most common closing costs
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associated with a real estate transaction,
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which side they're typically
assigned too, but not always,
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and just a general overview
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of what these parts of the
closing costs actually do
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and how much you can expect them to be.
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Now, one is going to be
the real estate agent,
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and the real estate agent is
going to typically be paid
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by the seller, but not always.
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Whenever you sell a piece of real estate,
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the biggest chunk of the costs
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that are going to come from the seller
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are going to be in brokerage commissions.
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Now, this brings me to the
second closing cost associated,
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which is going to be the loan.
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Now, the loan traditionally is going to be
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a buyer-paid expense because
you are in fact the person
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who has to obtain the loan
to purchase the property.
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Now, this expense can vary
on a lender-by-lender basis.
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The biggest cost is going
to be the actual fee
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associated with getting the loan
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and making sure that the house
itself is in working order
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to actually obtain the loan.
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When you purchase a house with cash,
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you don't have to do an appraisal,
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so the closing costs are
going to be a lot lower.
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Now, some mortgage companies
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charge a loan origination fee
of 1% of the loan or more.
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In Washington State, we use
title and escrow companies,
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so you'll have their fees as well.
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Now, in other states, attorneys are used.
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A title person's going to
be a very important person
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because you wanna make sure
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that the title to the
property is unclouded,
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meaning it doesn't have any liens
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or encroachments on the title.
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The title company is your best resource
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for that information.
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So, make sure that you
get a good title company
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and make sure that you get
title insurance for the property
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because title insurance is
gonna help you fight off
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any people who claim to have
any interest on the property.
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There's gonna be other costs involved
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with actually inspecting the property.
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When you're about to purchase a home,
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it's highly recommended
to get a home inspection
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to make sure that it's structurally sound
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and not in any need of major repairs.
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And lastly are appraisers.
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Most loans these days require
you to get an appraisal
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in order to actually qualify for the loan,
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so that's gonna be a closing cost as well.
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There's also prorations involved
with closing costs as well.
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Also, if you have an HOA,
the title and escrow company
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will prorate that HOA property fee.
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They'll also prorate the insurance
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and property taxes down to the exact day
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to make sure that it's fair
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and nobody paying any extra
for any of those services.
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People wonder when they'll find out
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the exact figure for closing costs,
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and this comes in the way of a CD,
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or closing disclosure, from your lender.
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Now, if you liked this video,
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you'll wanna head over to
a video I did a while back
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on earnest money and what it is.
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So, you just wanna click
right up here to access it.
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Now, people call me all the time.
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So, if you'd like to know more
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about how to get your
closing costs paid for
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or rolled into your loan or
thinking about moving here,
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give me a call or send me
a text at (206)940-4039.
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I would love to have a
conversation with you.
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I hope you found this information helpful.
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And if you liked this
video, give it a thumbs-up,
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comment below, share it with a friend.
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And before you leave,
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don't forget to hit
that 'subscribe' button
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so you don't miss any future videos.
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Thank you for watching my video,
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and make it a great
home-buying and selling day.
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I'll see you on the next one.
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