how much for closing costs, etc to estimate?

[ktgrok]

Or rather, if I can sell this house at 290K, and we owe 150K on it, and we want to buy a new place that is about 425K, how much should I say I can put down as a down payment? I know we will need some of what we get out of this house for paying closing costs, etc...so not all the profits can go towards down payment. But about how much should I say, as I apply for new mortgage preapproval?

And then there are the realtor fees, almost forgot that!

Edited September 15, 2021 by ktgrok

[prairiewindmomma]

I would plan on about $100k, personally.

290k-6% in commission = 272,600 - 5k for miscellaneous repairs, odd fees, etc. = 267,600-150,000 = $117,600.  I'd set aside the $17,600 for fees, unanticipated repairs and expenses on move in.  If you discover there is a lot leftover, you can just immediately put it towards principal. 

[Carol in Cal.]

I think a decent estimate is 7%, but you really want to get that from your realtor.

So, estimate 7% of the 290K as closing costs, and whatever you would spend to move, plan in a little cash cushion at least, and then put the rest toward the down payment.  You really should try to put at least 20% down to avoid PMI if possible.  

I strongly suggest that you have this conversation with one or two mortgage professionals though before you apply.  There might be local programs that would change these answers, or you might qualify for military or other assistance.

[ktgrok]

Ok, at least now I know the realtor is an okay person to ask this, lol. It's been so long since I bought/sold a home I feel like I've never done it before. 

I just messaged her to ask, and to clarify she still thinks the asking price we talked about is the right one, now that she's seen the home and we discussed repairs, etc. 

 

[prairiewindmomma]

Oh, and with the above, I am making the assumption that you are covering most of the moving expenses yourself....you might hire a few guys for six hours to move the really heavy furniture pieces, but everything else is on you and you're going the U-Haul route....so only 2-3k in moving expenses slotted into that $17k slush fund.

[prairiewindmomma]

Just now, ktgrok said:

Ok, at least now I know the realtor is an okay person to ask this, lol. It's been so long since I bought/sold a home I feel like I've never done it before. 

I just messaged her to ask, and to clarify she still thinks the asking price we talked about is the right one, now that she's seen the home and we discussed repairs, etc. 

 

You should be asking at least three realtors for pricing strategies, based on current (like this month) sales.  I know you know this, but just a gentle reminder not to let this go in an effort to just get it done and not hassle one more thing. This could be like leaving $15k on the table in a really fast paced market.

[Scarlett]

Have you found a house? Or are you just working on getting preapproved?

[ktgrok]

Yeah, i am setting up a separate budget for moving expenses - we have some money set aside for that, as well as any repairs that need to be made.That stuff will come out of funds we already have set aside (thank you bonus money from DH's company, lol)

But need to know how much of profit form house is going to be able to be used for downpayment, after realtor fees, closing costs for both selling and buying, inspections, etc. 

[sgo95]

Google says 3% on average in Florida on top of the realtors' fees (usually 6%), so 10% to be conservative. So after paying the mortgage, you would net ~111,000. Personally I would just put 20% down so you have funds to change things in the new house.

[ktgrok]

Just now, Scarlett said:

Have you found a house? Or are you just working on getting preapproved?

Just working on getting pre-approved. 

[ktgrok]

1 minute ago, prairiewindmomma said:

You should be asking at least three realtors for pricing strategies, based on current (like this month) sales.  I know you know this, but just a gentle reminder not to let this go in an effort to just get it done and not hassle one more thing. This could be like leaving $15k on the table in a really fast paced market.

I've talked with two, and both came out pretty much exactly the same, and what we expected as well. This one I really like, and she got certified with Knock loans for us, as we'd prefer to go with them if possible for the mortgage. 

[ktgrok]

1 minute ago, sgo95 said:

Google says 3% on average in Florida on top of the realtors' fees (usually 6%), so 10% to be conservative. So after paying the mortgage, you would net ~111,000. Personally I would just put 20% down so you have funds to change things in the new house.

That makes sense. I do have the option on the paperwork to put a percentage instead of an amount. 

And I assume, since it says that the buying price can be estimated, that they don't freak out if you have to change things by a small amount - this is just for the initial stages. 

[prairiewindmomma]

I'm pulling up my buyer's statement and it looks like we were at <now edited for privacy> for our last closing in closing costs. $4k of that was to buy a point from our mortgage so that we could really bring down the interest rate. That does include a home warranty for $800 and 6 months pre-paid taxes in addition to all of the various fees and recording charges.

ETA: that did include appraisal, but did not include inspection fees (which we had to do for two houses as we discovered a huge issue in our first house and had to break contract). I think we paid about $3k for inspections but we went all out on inspections---full systems, sewer scope, radon testing, etc.  We had gotten burned by our previous home needing a lot of repairs we hadn't anticipated.  We knew more of what we were getting into this time because of the detailed inspections (but still had a bunch of unanticipated repairs.)

PPS: if someone chimes in and says they didn't pay for all of that and were just fine, don't be that person. I know that some of you have charmed existences, but for the rest of us, it feels like a kick in the teeth 🙂

Edited September 15, 2021 by prairiewindmomma

[Arcadia]

We were asking about a prequalification last week, so slightly stricter than a preapproval. Closing costs for us are typically over $10k. The banks are also expecting 20% down. 
Our current home is paid up. What was interesting was the banks were saying that they are looking at either an MLS listing or a rental agreement for our current home before closing on the mortgage.
They factor in the cost of maintaining the current home as sum of property tax, home insurance and HOA and divided by 12 to get about $900 monthly expenses until home is sold or rented out. 

[Lecka]

I would look at 20% of $450,000 and say that’s $85,000.  
 

I would not go under that.

 

Then we have paid off a vehicle that had a higher interest rate, and we have reserved money for things like furniture and needed projects.

 

You can go on bankrate.com and look at what your payment will be at different numbers for the down payment.  
 

We moved a year ago and we still are figuring out what projects to do now and what projects to put off, and some things we didn’t know about when we moved in (we knew but didn’t know one thing would cost what it did, for example).  
 

 

[Lecka]

For example — I put in $100,000 down on this, and i put down a 2.875% interest rate, 30year loan.

It says the mortgage payment would be about $1,350.  Then you would add your tax, insurance, and HOA if there is HOA.  
 

I think it’s better to err on the side of caution and keeping a little more cash on hand in case it is needed.  Especially when you are going to put down more than 20%.  
 

If that payment looks high — that is when I think it makes sense to pay more to lower the monthly payment.  
 

We don’t have tax considerations though basically just because we don’t have anything costing $$$!  
 

 

Edited September 15, 2021 by Lecka

[Arcadia]

3 minutes ago, Lecka said:

We don’t have tax considerations though basically just because we don’t have anything costing $$$! 

I was worried about capital gains tax but the allowance is actually rather high at $500k for couples filing jointly.

"If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse." https://www.irs.gov/taxtopics/tc701

[ktgrok]

Ok, I'm going to put 20%, and then I can see about putting down more if we can, but that's better than getting paperwork started then finding out we can't put that much down and starting over. 

[Carrie12345]

I have no idea what real estate/school taxes are like down there. If you plan to escrow them, different lenders may have different amounts (usually in months) to prepay at closing.

[Lecka]

https://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
 

I had meant to link this earlier.  It’s an amortization calculator — will say the mortgage but not tax, insurance, HOA, whatever other payment there might be.  

[Lecka]

This is just me — but if there are no penalties (taxes, PMI payment) for paying more than 20% — I think make sure the monthly payment is reasonable!  
 

Right now — mortgage rates are low.  I think it is good to have a reasonable payment!!!!!!!!!  But after paying 20% I think it’s okay to look at other bills and things that might he needed.

But ideally if you look at what the payment would be for a 15-year mortgage — that would be possible, too.

 

But when the interest rate is low, it’s a choice to pay the minimum and have a 30-year mortgage, or look at other bills with a higher interest rate or retirement savings etc.  

 

But I think with 20% down and the monthly payment is affordable and reasonable — to me that is safe.  
 

I think it doesn’t hurt to bring this up to the realtor and the mortgage broker.  Maybe they will say “oh there’s this” that might be local.  Or seeing if you know anyone who bought/sold recently lately who had something unexpected.  
 

Good luck — it’s exciting 🙂

[Arcadia]

2 hours ago, ktgrok said:

Just working on getting pre-approved. 

When we asked recently, another thing that the banks changed was how they interpreted stock options. Previously they would compute based on AGI but now they are giving a more conservative estimate based on the base salary. If your husband’s bonuses are more or less fixed, that makes estimation easy. If bonuses are based on stock options, then each bank/credit union would have their own policy as to risk assessment. 

[prairiewindmomma]

1 hour ago, Arcadia said:

When we asked recently, another thing that the banks changed was how they interpreted stock options. Previously they would compute based on AGI but now they are giving a more conservative estimate based on the base salary. If your husband’s bonuses are more or less fixed, that makes estimation easy. If bonuses are based on stock options, then each bank/credit union would have their own policy as to risk assessment. 

That is understandable but frustrating.  Is it solely base or base + % of cash award + stock? Do you know? This has a huge impact on a whole swath of people.

[Arcadia]

10 minutes ago, prairiewindmomma said:

That is understandable but frustrating.  Is it solely base or base + % of cash award + stock? Do you know? This has a huge impact on a whole swath of people.

We can go with solely base pay and qualify for a lower loan amount. 
If we want to qualify for a higher loan amount, these are the extra documentation that they ask for:

2019 last paystub, 2020 last paystub, 2019 and 2020 W2,  RSU vesting schedule grouped by grant number (to see how many shares granted in year 2019, 2020 and 2021)

The difference in amount that we can qualify for is about $300k. My husband does not get a cash award. His is just base pay and RSUs. 

[prairiewindmomma]

14 minutes ago, Arcadia said:

We can go with solely base pay and qualify for a lower loan amount. 
If we want to qualify for a higher loan amount, these are the extra documentation that they ask for:

2019 last paystub, 2020 last paystub, 2019 and 2020 W2,  RSU vesting schedule grouped by grant number (to see how many shares granted in year 2019, 2020 and 2021)

The difference in amount that we can qualify for is about $300k. My husband does not get a cash award. His is just base pay and RSUs. 

Thanks!! That is much more reasonable! We have no plans to move, but we rarely do before a move happens upon us. 
 

 

[Arcadia]

8 minutes ago, prairiewindmomma said:

Thanks!! That is much more reasonable!

RSUs just fluctuate too much in the tech industry so banks just probably want to lower their risks. It isn’t rare to go from having more than twenty RSUs to less than five within a few years of employment. That’s why people job hop every few years for the sign on bonus and RSUs.

Edited September 15, 2021 by Arcadia
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