The market has become very competitive with many new loan officers and real estate agents jumping in the game. My information may not be completely accurate, but in a recent conversation, it was said the number of agents registered in Arizona has jumped from around 50,000 to 90,000 in just a few years. I’m sure the amount of loan officers has increased similarly in size as well. With it so competitive, it is nice to see quality questions coming from our borrowers on a more frequent basis. The most common of all the questions is…

“What are my closing costs going to be?”

“Closing costs” is a term defined differently by each lender. The reason I say this is because closing costs may be explained by one lender as lending fees, title fees, appraisal fee insurance, prepaid insurance, taxes, and interest; while the lender next door may only consider closing costs as actual fees and not anything prepaid or reserves. Closing costs outside of industry professionals is also perceived differently. Many real estate agents I speak with are under the impression that closing costs on average equals 3% of the purchase price; which is just not true. It‘s extremely important to understand that no matter how you define closing costs, there are variable costs and fixed costs involved. The percentage of closing costs in relation to purchase price will be a higher percentage on lower purchase prices and generally lower on higher purchase prices because of those fixed costs. Below is a breakdown of the most common types of costs involved to purchase a home with financing.

Remember, everyone has a different financial profile and will be viewed in separate ways. If you would like to run your situation by us to see which programs you are eligible, don’t hesitate to reach out.

1. Don’t open new debts while in contract
2. Don’t quit your job
3. Don’t deposit substantial amounts of cash into your bank account.
4. Disclose all debts

by Andrew Augustyniak Branch Manager
Prime Lending