Hawaii Closing Costs

Closing Costs

“I have my down payment saved, I am ready to start looking.” This is something I hear often. Most first time home buyers and even some sellers forget they need to save a nice chunk of change for their closing cost. Closing costs are fees and charges due at the closing of a real estate transaction. They are usually anywhere from 1-4% of the purchase price. Closing costs are different for buyers and sellers in every transaction. You can try to negotiate and ask the seller to pay for a portion of your closing costs, but it’s unlikely you’ll get out of paying them altogether.

Cost Included?

I’ve attached the verbiage below, which comes directly from our Purchase contract:

Charge to Buyer, if applicable:

• 40% of the premium for standard coverage title insurance and any additional costs relating to the issuance of extended coverage policy (including a lender’s policy)
• Cost of drafting mortgage and note or agreement of sale
• Cost of obtaining Buyer’s consents
• Buyer’s notary fees
• All recording fees except documents to clear Seller’s title
• 50% of Escrow fee
• Condominium and Association ownership transfer fees
• FHA or VA discount points and any mortgage fees

Charge to Seller, if applicable:

• 60% of the premium for standard coverage title insurance
• Cost of drafting conveyance documents and bills of sale
• Cost of obtaining Seller’s consents
• 50% of Escrow fee
• Seller’s notary fees
• Cost of required staking or survey
• Recording fees to clear Seller’s title
• FHA or VA mandatory closing fees
• Conveyance tax (subject to Paragraph F-7)
• FIRPTA (Federal withholding tax)/HARPTA (State withholding tax)

A Break for Veterans

When writing an offer for my VA buyers, I will ask the sellers to provide my buyer with a credit that will be applied towards their closing cost. This is a good way to keep the contract nice and clean for the sellers to review. You may receive a discount for being a part of our US military. For instance, they may be able to waive the underwriting process fee, which can exceed $1,000. Above all, this can save you money, which can be a nice surprise for first-time home buyers!

In this paragraph, I’m going over the section within the VA Financing Addendum which covers what the buyer may not pay for. ‘Under VA Loan Guidelines, Buyer may not pay for the VA “Non-Allowables” which include escrow, notary, mortgage, assignment of mortgage, leasehold or deed documentation, title endorsement, photos or inspections, attorneys, homeowners association maintenance transfers, tax services, underwriting, processing, recording, fund wires, couriers, and tracking fees, as applicable, along with any other fees not allowed to be charged to Buyer unless the Veteran is not charged a loan origination fee by his Lender (which may not exceed 1% of the loan amount). Only then can the Veteran pay the VA “Non-Allowables,” but only up to 1% of the loan amount.’

Last but not least…

In conclusion, closing costs can easily add up. It is always a good idea to account for these costs when planning on saving for the purchase of your next home. If you would like to know how to get an estimate on your closing cost, per your specific transaction, please email me. I hope you found this blog to be helpful. I know it is a lot of information to absorb. If you have any questions, please don’t hesitate to contact me. Click here for my website!