Recently, on NBC’s My Carolina Today show, we shed light on the variables and costs involved when buying or selling a Raleigh home. We had such a positive response to the video, we thought we would dive in a little deeper and expand on the topic. The video can be seen here.
Triangle Real Estate can be very confusing because there are so many variables and people involved in the transaction. When we make any purchase; be it retail stores, gas station, new cars, hotels, airlines and just about everything we buy in life, there are always additional cost added to the purchase price. Cost such as service charges, taxes and even a 15% to 20% gratuity. The difference is the consumer always pays the cost, they are never shared. With a real estate transaction there are many ways to structure the home buying and selling closing costs between all the parties involved. Here is an overview of some of the real estate closing cost your will find in the greater Raleigh/Cary/Wake Forest and surrounding areas.
Raleigh Home Buyers Cost:
The good news is a home buyer can have Exclusive Buyer Representation from an experienced Realtor without paying any Realtor fees if they purchase a home listed for sale on the Triangle Multiple Listing Service or new construction. However, the buyer will need a down payment for their home mortgage unless they take advantage of 100% financing that is offered in certain regions of Wake County, Raleigh, Cary, Wake Forest, and other North Carolina cities. Depending upon the loan type, down payments for mortgages usually start at 3.5%. If a home buyer wishes to avoid the extra monthly expense of private mortgage insurance they will need to have a 20% down payment. Investors from all over the world are rushing into the Raleigh market because they know how bright the housing market is here. These investor buyers typically need 25% to 30% for their down payment on a home mortgage but, many also pay cash. A cash purchase has the lowest closing cost of all but, even buying a new home with cash there are still additional closing cost. So again, who is buying and what loan type they choose to purchase their Raleigh real estate will affect the cash needed for a down payment and closing cost.
More Good News for Home Buyers in the Raleigh/Wake Real Estate Market
While it is still possible to own a beautiful new Triangle home without having any down payment you may need to have some money available for closing cost unless your Exclusive Buyer Agent gets the seller to pay them. That’s right, the mortgage closing cost can be paid by the seller if the Offer to Purchase Contract is structured correctly and negotiated well. The following are some of the closing cost associated with homes purchased in Raleigh, Cary, Wake Forest, Morrisville and most cities surrounding the Research Triangle region:
1. Originating fee : New mortgage origination cost which will vary between $2,000 to $6,000 depending upon the price of the home. The lender buyer chooses the loan type. When buyers are shopping for a mortgage, they should always request a Good Faith Estimate from the mortgage professional. The Good Faith Estimate allows buyers to compare costs between mortgage lenders.
2. Escrow account: for home owner insurance and property taxes
3. Home Inspection fees
4. Attorney/legal fees : Expect $1,500 to $2,000 depending upon the price of the home.
5. Title insurance : Title insurance is an insurance policy designed to protect both the mortgage lender and the new homeowner from anything that could negatively affect the title of the home.
How Can Raleigh Home Buyers Reduce the Costs Involved?
Wake County Home buyers that plan to live in the home and not rent it the day of closing can choose a 100% mortgage so they do not need any down payment to eliminate a big cash requirement for their purchase and their Exclusive Buyer Agent, can negotiate to get the seller to pay all the closing cost within the transaction or if the seller will not pay for the buyers closing cost we can refer the home buyer to one of our preferred mortgage lenders who already has lower closing cost to begin with but, who also has the ability to offer a no closing cost mortgage. This is done by increasing the mortgage interest rate a very small amount which will also increase their monthly payment so we have to make sure this negotiation stays within their household budget. In most, cases we can negotiate a deal for our buyers that can get them into a new house for under $1,000 less than most rental security deposits. And of course, they can use our moving van for free to move into their new home.
It is very important that home buyers have a consultation with us and our mortgage lenders so together we can help them structure a purchase that meets their financial goals for both upfront cost, an affordable monthly payment too.
Stay tuned for part two of the “Making Cents” blog series!