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What Are Mortgage CLOSING COSTS? - YouTube
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hi there i'm mark anderson i'm a
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mortgage banker with paramount bank no
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matter where you are in the country i'd
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love to help you with your mortgage
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transaction please call me or text me at
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the number below anytime to learn what i
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can do for you on your mortgage
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[Music]
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on this subject you've probably got
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three primary questions
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what are closing costs
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how much am i going to have to spend
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and three how do i make sure i'm not
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paying too much
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broadly speaking closing costs are
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defined very simply as any fee you are
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required to pay
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in order to close your mortgage
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transaction the process behind the
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scenes to get your mortgage from
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beginning to end
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it's complicated and it involves a lot
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of different services to start off with
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the fee that you probably want to look
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at more than anything else are any
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service fees paid directly to the lender
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you might see this referred to as an
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origination fee
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underwriting fee
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admin fee
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processing fee discount points
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it's going to be very important when you
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get an estimate of fees from a lender
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just ask them to tell you okay out of
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all these fees like what are the fees
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paid to you and what are the fees paid
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to everybody else because you're going
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to need to be able to determine what
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that lender is actually charging you
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beyond the lender fees we get into
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appraisal
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there's a credit report there's a flood
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certification we're required to make
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sure that your property is not in a
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flood zone if it is in a flood zone we
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then have to make sure that you get
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flood insurance from there we've got
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title insurance
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title services depending on the state
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that you're in you might have an
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attorney fee beyond that we've got
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homeowners insurance if you're buying a
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house one of the things you're going to
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have to pay for at the closing is you
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have to pay the insurance premium
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forward so whatever is due for the year
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that's collected as part of your overall
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closing cost package related to
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homeowners insurance you're also if your
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loan carries an escrow account which it
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may or may not if it does carry an
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escrow account you have to fund that new
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escrow account with an escrow deposit
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and then finally there's interest
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depending on the day of the month that
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you close you've got to pay interest
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from the day that you close and fund
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until the end of that month
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this is an area where i'm going to have
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to kind of get on my soapbox a little
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bit because i really have a lot of
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sympathy for the consumer you know if
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you're like me you want to research the
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heck out of something before you get
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into it and especially something as
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important as buying a house or
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refinancing you want to go around poke
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around find information get some answers
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in place before you make that call to a
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lender unfortunately the reason i have
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sympathy is if you go googling around
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for closing cost information
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i got to be honest the information
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you're going to get is very likely going
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to be
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very inaccurate in almost every article
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that i pulled up just to kind of check
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in before making this video
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there is almost always a reference to
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some sort of percentage range
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you know you'll see a reference to you
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can expect to pay between three percent
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and five percent of your purchase price
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and closing costs i know that everybody
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wants a rule of thumb some sort of
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general guidance to lean on but
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unfortunately this notion that you can
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boil down closing costs to kind of a
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percentage range i mean it's it's just
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wrong the actual amount that you are
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going to have to pay in closing costs
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depends on so many variables the state
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you're located in the type of property
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you're purchasing is it a single-family
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residence is it a condo is it a
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multi-family property there's so many
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little details that end up driving the
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amount that you're going to have to pay
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that it's really impossible for me or
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anybody else to come up with some sort
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of percentage range you can expect fact
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is the only way
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to get a really good close accurate
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estimate
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of how much you're going to have to pay
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in closing costs as much as you might
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not want to do it you got to call a
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lender especially if you are in that
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kind of exploratory stage maybe this is
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a project you're going to do next year
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two years from now you may be reluctant
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to pick up the phone and call a lender i
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don't blame you you don't want to
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trigger a bunch of automated emails you
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don't want to be
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bothered incessantly with follow-ups
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just checking in after our conversation
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if you don't want any of that but you
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want the information just call me i'm
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not going to bother you with that kind
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of stuff i'll give you a clear accurate
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estimate for what you can expect to pay
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in closing costs for your scenario and
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i'll put it onto a nice little
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spreadsheet tool that i put together
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that actually functions also as a
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calculator so you can throw in different
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sales prices different tax amounts and
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the form is going to auto calculate
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closing costs and the monthly payment
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hello dinkerton could you tell these
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kind people watching this video to like
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and subscribe to my channel
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it really helps this spread out to more
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people could you do that for me buddy
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where i'd recommend starting here is
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focus on the lender fees what
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complicates this
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is that the amount of fees a lender
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charges you can actually influence the
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rate that they offer you can kind of
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play with either variable to affect the
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other so one thing you can do as a
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consumer to make sure you're getting the
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best deal on lender fees is actually to
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ask each lender that you talk to to give
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you three different interest rates what
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you're likely to get is kind of the
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middle of the road rate where they are
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charging kind of maybe their standard
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amount and closing costs
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the rate just above that middle rate is
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going to likely carry what's called a
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lender credit so in this case the
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lender's actually earning more than the
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revenue that they need to make
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because you're going up in rate
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therefore they're able to take the
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overage so to speak and apply that
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toward your closing costs to reduce them
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conversely if you go to the rate just
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below the kind of middle option what
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you're going to see there is that
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there's going to be some amount of
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additional fees paid in the form of what
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we refer to as discount points in order
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to get down to that interest rate beyond
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the lender fees once you're into that
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category of third-party closing costs
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there are a lot of fees in there that
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you know they're just going to be what
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they are you know if you're buying a
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home in the city of say chicago illinois
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there's going to be transfer taxes that
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are paid to the city to the county to
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the state
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those are fees that really they're not
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going to change but a good example of a
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fee category that's a third party fee
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not paid to the lender where you can do
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some value shopping is with title
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insurance now it is extremely rare for
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consumers to actually shop around to
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find the best deal on title insurance
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the average consumer is going to go with
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the title company that their realtor
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recommends and candidly i don't see
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anything necessarily wrong with this a
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realtor is generally going to work with
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the title company
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that they know is reliable trustworthy
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they get the job done but
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given the simple fact that in the vast
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majority of cases you are going to be
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paying more in title fees than you pay
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to the lender i think it's worth doing a
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little bit of shopping around overall as
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is the case with really anything that
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you're going to go out there and buy
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whether it's a product
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or a service you know it's not always a
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good idea
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to go with the cheapest option it may be
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the case that the cheapest title company
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on the block or the lender that's
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offering a cut rate service it may be
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the case that those fee reductions come
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at the expense of good reliable service
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but fundamentally if you want to make
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sure that you're not paying too much you
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want to make sure that you're getting
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good value for money ask questions talk
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to your loan officer make sure you have
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a full understanding of what their fees
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are what their estimates are for the
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various third party fees
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talk to your realtor ask questions are
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you required to pay them a commission
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for their services
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talk to the title company maybe shop
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around a little bit cross compare in a
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lot of cases if you demonstrate to the
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various service providers that you're
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working with that you are a
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sophisticated consumer you want to know
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what's going on you have an interest in
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making sure that you're not overpaying
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sometimes just by poking your head up
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participating in the process asking
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questions sometimes that really is the
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best way to make sure that you're not
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overpaying
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once you have a firm idea of what you're
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going to pay in closing costs
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i think it is very important to consider
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one strategy
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to reduce the amount of your
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out-of-pocket expenses on the day of
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closing and that is to negotiate for
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your seller to cover some or all of your
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closing costs one of my soapbox issues
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that if you've seen other videos you've
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maybe heard this advice before but i am
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a big believer
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in my clients preserving as much of
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their cash as they possibly can
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because fundamentally owning a home
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comes with
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costs
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expenses things you're going to want
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slash need and candidly the
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line between one to need starts to blur
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when you get into a home i've had a lot
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of people say you know hey i get it uh
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yeah it would be nice mark if the seller
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paid my closing costs but you know why
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on earth would they do that if there's
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another offer where they're not going to
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have to pay the closing costs what
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you've got to keep in mind is that what
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the seller really cares about at the end
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of the day is not whether they're paying
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some of your costs or not
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they're concerned with their net bottom
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line how much money are they walking
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away with in proceeds from the sale on
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the day of closing to that end let's say
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you know your closing costs are going to
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be about six thousand dollars
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and let's say you have a property in
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mind that's listed at 200. from the
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seller's point of view there's really no
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major difference at all between a
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straight offer at 200 000 with no
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closing costs paid
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and offering 206 000 with that seller
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paying 6 000 in cost there's going to be
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a very slight difference in the amount
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of commission that they pay to their
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realtor but we're talking about just a
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percentage of that additional 6000 so i
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strongly recommend that you talk to your
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realtor you make it clear that your
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intention is to negotiate this or maybe
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it's not you may be in a situation where
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that's not really a big deal and that's
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fine but i see a lot of people leaving
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money on the table
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a lot of folks that would have benefited
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from having an additional five or eight
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thousand dollars lying around after they
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move in all right well i hope that you
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found that overview on closing costs
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useful please do like the video it helps
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this spread out to more people also
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subscribe to my channel i do a lot of
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longer format content where i go into
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much more detail on all kinds of
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subjects related to the mortgage and
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real estate process thank you so much
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for watching i really appreciate it and
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i hope to talk to you again soon
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