Purchasing a home here in Salem Oregon is a huge investment and many people save for a down payment, but forget about closing costs. Recently, the real estate document recording fee was raised from $11 to $26. A $15 increase. These funds would be mostly used for affordable housing projects. With that recent news, as well as with the increased rates on Fannie Mae and Freddie Mac loans, that start April 1, 2009, it seems like a good time to take a look at typical closing costs here in Oregon.
Buyers of a home typically pay for the following lender closing costs at close of escrow:
- Prepaid interest on the home loan
- Loan origination fees (1-1.5% of the purchase price is common)
- Credit report fees
- Tax Service Fees
- Administration Fees
- Flood Determination Fees
- Prepaid insurance and prepaid taxes for your escrow account with your lender.
- Full insurance premium
The escrow fees a buyer typically pays here in Salem Oregon are:
- Closing fees
- Document Service Fees
- Mailing Services
- Wire Transfer Fees (if used)
- Lender’s Title Insurance
- Recording Services
So what will change about these figures with the $15 increase and increase in rates? The cost of recording services is split between buyers and sellers in Oregon so buyers would see a $7.50 or so increase in their portion.
The bigger issue for buyers is the raise in fees by Fannie Mae and Freddie Mac. These fees vary depending on credit scores, amount down, and what type of purchase. Condo purchases will require a higher fee.
Oregon does not have real estate transfer taxes like many other states have so buyers and sellers don’t have to add that aspect into the negotiation of a home sale. The amount that buyers will have to bring to the closing table is going up. This will impact negotiations as buyers no longer will ask for $5,000 in closing costs as part of the purchase agreement, but it may be $10,000 in closing cost help.
Lenders are working hard to recoup some of their losses from bad loans. This is one of the consequences.
What’s the state of the financing market? We hear so much bad news in the media, but I see people buying homes, cars, etc. What is the expected/usual/average down payment required, what is the limit of income to debt ratio, etc?
Some people all scared about there being no financing, but it seems like that is just less financing for those who likely couldn’t afford it anyway; a return to perhaps the days my parents used to speak of where you had to have a down payment of some sort, have a good balance of debt to income, etc.
How can I find out what to budget for closing costs?
Generally speaking you should budget $6-$7,000 depending on the price range of the home. The more expensive the home the greater the closing costs. If you haven’t talked to a lender yet, Mike Malowney at Windermere Mortgage is fabulous and I also like Carmen Babb at Wells Fargo. Closing costs will vary depending on loan program, credit scores, down payment, etc.