Real Estate FAQ’s, vol. 1

How long does it take to close on a house?

Prior to TRID changes (which came down from Dodd Frank legistlation) that happened a few months ago, we could close most loans in 30 days after an offer is accepted.  Now it typically takes 40-45 days to close.  Although I don’t see it very often, I’m told that it is still actually possible to close in under 30 days if you have EVERYTHING your lender needs ready ahead of time, and never have any delays.  Cash offers of course can close almost immediately, usually in under a week if both parties agree.

How do realtors get paid?

Realtors are paid nothing unless a house closes. While rates are negotiable by law, the compensation that has become the industry standard is that the seller pays a 3% commission to the buyer brokerage, and a 3% commission to the seller brokerage. If you are a buyer, you are in luck because you will not have to pay anything! Your realtor doesn’t get paid for showing houses, only if he or she helps you complete the task.

How much do I have to pay as a down payment?

This all depends upon what type of loan package you use. With FHA loans at least 3.5% is required, with conventional loans 5% is required, with USDA loans and VA loans you can put 0% down! Check with your lender as well about grant programs that can pay for ALL of your down payment. Taking these grants may increase your interest rate, but the down payment itself you is paid for, and you don’t have to pay that money back.

How much will buyer closing costs be?

ROUGHLY, it will be about 4% for buyers. This includes your pre-paids like insurance, taxes, and insurance but does NOT include your downpayment (which will be different depending upon your loan package and what you can afford).

How much will seller closing costs be?

Again, ROUGHLY, it will be a little under 7% (assuming 3% commissions paid to the buyer and seller brokerages).  Every situation is going to be different, so ask your agent for a better estimate based on the actual house you want to buy. For the most accurate numbers, ask your lender for the actual closing costs.