How much did you save for closing?

hoffse · May 2014

Hi everybody - so I just saw a HUD-1 for a sale of a house in my county. Turns out, a lot of the fees were a lot lower than I was expecting.

H and I have our downpayment in place, but now we're saving for closing costs + those extra move-in expenses. Can I ask how much you all set aside for that in your first house?

I'm figuring that after we move in we will also need to buy a washer/dryer, fridge, stove, microwave, couch, and (hopefully) have enough left for a new mattress. Also, I assume we will want to paint, have the locks changed, etc. If we get lucky, we'll find a house that has some of the appliances included, but I'm not counting on it. So I'd like to save using the assumption that we will need to buy them.

H and I are thinking maybe $25K saved for all of it? Or is that low?

TIA

SmrBrd2012 · May 2014

From all the websites I've searched on, they say to estimate 2-5% of the home purchase price. Our condo price is $230k and closing costs are estimated to be around 5k, so ours are on the lower end. We had set aside 10k just in case.

We have some money set aside for move in expenses but we are going to deal with those on a case by case basis. We have some furniture/small appliances right now so there is nothing we will be absolutely dying for when we move in. Condo is move-in ready.

Xstatic3333 · May 2014

Now I haven't bought yet, so I'll look forward to the responses too, but our target price range is $150,000-$200,000 and we have $4,000 set aside for closing costs currently, and are shooting for $5,000. Next we'll save for moving, which should be about $3,000. (I know full service movers are not MM, but frankly it will be worth it to us). We are looking in an area where the sellers will often negotiate to cover closing costs, and we plan to try for that.

We already own most appliances except for a stove and dishwasher, but very few homes we're looking at don't include them.

maple2 · May 2014

This will probably depend a lot on how much your home costs and how many things you feel like you need/want to do right away. Like pp we set aside around $10,000 for closing costs and immediate move in expenses. For us that included any appliances, yard maintenance supplies, and basic household goods like toilet paper and garbage cans. We knew we would be moving with a weeks old baby and didn't want to spend more time than necessary without a home, so we didn't plan to do any painting or stuff like that right away. We also had enough furniture to get by, so buying new stuff at the time of house purchase was not a priority.

hoffse · May 2014

Thanks, all - this is helpful.

Yes I have lawnmower and trimmer on my list too, though if we buy in fall we might be able to delay those a bit. A grill is also on there, but it's delay-able.

The couch really can't be delayed... we have a teeny tiny love seat for our apartment, and that's it. About half the houses we've looked at come with appliances, about half don't. So I'm not sure which way that will fall.

H doesn't get his bar results back until the very end of September anyway, so we have time to save before going under contract. I'm just trying to get a feel for it now. This summer is going to be pretty tight, because we're trying to squeeze every penny we can out of our budget for savings, and H won't start work until the end of summer. If we could scale back the savings even a small bit this summer, it would make things feel a lot better. I just don't really know what to be shooting for. It sounds like $25K might be pretty high... especially considering the HUD-1 I saw. Seriously, some things were like half of what I had been estimating.

@April - congrats on closing!

hoffse · May 2014

AprilH81 said:

Xstatic3333 said:

Now I haven't bought yet, so I'll look forward to the responses too, but our target price range is $150,000-$200,000 and we have $4,000 set aside for closing costs currently, and are shooting for $5,000. Next we'll save for moving, which should be about $3,000. (I know full service movers are not MM, but frankly it will be worth it to us). We are looking in an area where the sellers will often negotiate to cover closing costs, and we plan to try for that. We already own most appliances except for a stove and dishwasher, but very few homes we're looking at don't include them.

Yes. They are worth every penny and if you are buying with a spouse then it is worth saving your marriage.

I hired movers for an inter-state move that required a month and a half of storage while I bought a new house. They had the truck unloaded and furniture reassembled in about 2 hours if I remember correctly.

We hired movers for Friday's move (about $1,100 for a local move that will take about 6 hours). We are already tired and cranky from packing and the buying and selling process. To have to move everything ourselves would have caused us to go to therapy (mostly kidding about that one).

You know, I hadn't even considered this, but I can see how it might be worth the expense. We will just be moving across town, but I imagine that I'll be a trainwreck by the time the buying process is over.

hoffse · May 2014

AprilH81 said:

hoffse said:

Thanks, all - this is helpful.

Yes I have lawnmower and trimmer on my list too, though if we buy in fall we might be able to delay those a bit. A grill is also on there, but it's delay-able.

The couch really can't be delayed... we have a teeny tiny love seat for our apartment, and that's it. About half the houses we've looked at come with appliances, about half don't. So I'm not sure which way that will fall.

H doesn't get his bar results back until the very end of September anyway, so we have time to save before going under contract. I'm just trying to get a feel for it now. This summer is going to be pretty tight, because we're trying to squeeze every penny we can out of our budget for savings, and H won't start work until the end of summer. If we could scale back the savings even a small bit this summer, it would make things feel a lot better. I just don't really know what to be shooting for. It sounds like $25K might be pretty high... especially considering the HUD-1 I saw. Seriously, some things were like half of what I had been estimating.

@April - congrats on closing!

It might help to talk to a few lenders and title companies to find out what fees are running. Some are flat fees and some are a percentage of the sale price. Obviously things like property taxes and insurance rates will vary based on the property, but you probably know ballpark amounts if you have been watching the prices in your target areas.

Our lender has been great and is very upfront about their fees. They have a bottom line on what they need to make on a sale. Either we pay with an up front cost or we pay with a higher interest rate. Depending on your situation either could work for you.

Good idea. I've talked to our credit union very casually about it... they usually offer a closing cost promotion on at least one of their mortgages. It just depends on which one is carrying that promo when it's time for us to buy. They also usually waive the origination fees for at least one mortgage product. We financed our car through them, and we've been very happy. Their rates are pretty low, so we will probably use them regardless. If we get lucky, they will cover most of our closing costs, but I'm not going to count on it, since things change all the time in that business.

juliebeannn · May 2014

We expected closing costs to be around $8k ($315k purchase price); it ended up being $8500. We also set aside $15k for painting, some light fixtures, rugs, and minor fixes around the house that we addressed right away, but are also using that as a starting point to save for our kitchen renovation that will happen in the late Summer/Fall.

Xstatic3333 · May 2014

@hoffse did you see the HUD-1 through your work, or are they public record? If they are, I'd be interested to look at one from my area.

hoffse · May 2014

Xstatic3333 said:

@hoffse did you see the HUD-1 through your work, or are they public record? If they are, I'd be interested to look at one from my area.

No I saw it through my work, so unfortunately I can't disclose the info. It was just the first one I had ever seen (we typically do commercial work), so I was surprised by how low some of the line items ended up being.

I was especially surprised by the transfer taxes and recording fees. They were dirt cheap.

Xstatic3333 · May 2014

hoffse said:

Xstatic3333 said:

@hoffse did you see the HUD-1 through your work, or are they public record? If they are, I'd be interested to look at one from my area.

No I saw it through my work, so unfortunately I can't disclose the info. It was just the first one I had ever seen (we typically do commercial work), so I was surprised by how low some of the line items ended up being.

I was especially surprised by the transfer taxes and recording fees. They were dirt cheap.

Nice! I know these things are state by state anyway. It's nice when it's lower than expected. I'm just basing my estimate off what local friends I'm close enough to ask have paid.

oneplusoneistwo · May 2014

Ours were about $5,500 on a $385K house. Here is a breakdown to get an idea of what to expect:

Appraisal Fee: $340
Credit Report: $32
Flood Certification: $14
Final Inspection: $115
Interest: $381 (you can calc this on your own with a rough idea of your mtg and int rate - we closed close to the end of a month so we only had to pay a small amount, but if you close on the 1st or 2nd of a month for example, you'd have to pay 28+ days of interest, which in our case would have been another $1K)
Escrow: Homeowners Insurance $220 (or 4 months worth depending on what it runs in your area)
Escrow: Property Taxes $1,365 (or 3 months)
Lawyer's Closing Fee $975
Lender's Title Insurance: $1,000
Owner's Title Insurance: $700
Gov't Recording Charges: $365

This is in the Boston area for anyone looking to figure out what is local.

Also, here is our experience on a few appliances:
Washer/dryer (Samsung he front loaders) $1,300 for the pair
Fridge (top of the line) $2,600

I think $25K is more than enough to be honest, almost no matter where you live, unless you are buying a $1M house (or tons of points, but that I would almost consider separately since it's a choice, not a necessity)!

strickland8052 · May 2014

I think our closing costs were around $5k, but the seller paid most of that. We probably spent another $5k in the first few months of moving to make the house a home. That includes about $3k for clearing out the backyard and installing a gravel driveway. The other $2k went towards building a fence (DIY project), installing blinds (DIY project), and buying rugs and curtains. We also ended up buying a washer ($800) later on, because the washer that came with the house broke.

I honestly think it depends on what the house needs and doesn't need. Our house came with all the appliances and didn't need any work, so I think we got out cheaper than it could have been. Regardless, I would think that $25k is MORE than enough.

hoffse · May 2014

Alright well it sounds like $25K will more than cover us. So I think that's what we'll shoot for. Anything leftover we'll send toward our debt once the dust from home buying has settled. This will let us loosen the reigns a smidge over the summer... thank goodness!

I feel a lot better about where we are with this. I just really had no sense of it.

@oneplusoneistwo, THANK YOU for that breakdown. That was super helpful! And I will definitely keep in mind the trick about closing at the end of the month vs. the beginning! That ought to be easy enough to plan...

Our credit union will require us to escrow 6 months of taxes and insurance. However, property taxes down here are significantly less than 1% per year. So that shouldn't be too bad.

ashleyjesse1112 · May 2014

This is what we are looking at for closing on our house:

$26,000 Downpayment (20% down)

$5,500 Estimated closing costs

$500 Inspection

$5,500 Money needed for paint, flooring - we are trying to DIY.

$38,400 Total

It comes with basic appliances - we will buy nicer ones on Black Friday. It will probably cost others less if they have a less % down and what they want to do to the house at move in. Anyways, this is our breakdown and we are from Washington State.

cbee817 · May 2014

We closed on our house back in November 2007 (30 year mortgage, 6.375%).

We had $15,000 from the sale of my condo to use for the house- both properties closed on the same day.

$7,000 down payment (5%)

$4,900 to real estate agent for sale of condo (7% of the condo sale.. outrageous considering our condo sold in 12 days and all she really did was put the listing online)

$3,100 for escrow set up, lawyer fees, inspection, bank fees, etc. We closed November 30th so our escrow amount was a lot lower because it was toward the end of the year and our first payment wasn't due until January 1st.

We also had about $40,000 in the bank at the time, but we opted not to use any of that on the down payment given the age of our house (built in 1926 so we knew it would need work), we had 1 car payment (had $8,500 remaining), and DH had student loans (had $21,600 remaining).

I wanted the cushion there in case one of us lost a job, the furnace/hwt died, plumbing repairs, etc (which all of those things happened!).

We had to buy a fridge, washer, and dryer right away. We put that ($1,700) on a local appliance store credit card for 12 months, 0%. The condo was nicely furnished and it worked in the house for the most part. We've replaced some bigger items (couch, dining room table and chairs, area rugs, etc) and gutted the kitchen.. it's a work in progress.

In November 2010, we refinanced to a 15 year at 4.0% (we rolled the refinance charges into our new mortgage and was able to drop PMI 2 months after refinancing). Our new payments were only $60 extra per month.

We hope to add to the principal once the girls are out of daycare and have it paid off by the end of 2019, 6 years ahead of schedule.

vlagrl29 · May 2014

I'm no help on this topic. We had our closing costs paid for by the seller.

brij2006 · May 2014

We bought a foreclosure for very cheap. So keep that in mind.

We had $18k saved, but we knew we were starting a remodel the minute we closed. $5k of that went toward appliances and a couch. About $1k went toward yard items, small patio set, and random things for the inside like curtains, garbage cans, and bathroom accessories. We also combined 2 apartments when we moved in together, so we made due with a lot of stuff and I gradually changed them out of the first year.

ETA: Closing Costs

Ours were around $1,100 for our $49k house. We made the bank (foreclosure) pay for their own realtors' commission and we paid for ours.

short+sassy · May 2014

I knew I shouldn't have opened this post, lol. My closing costs were horrific and it always makes me "sad panda" to see what a RIP OFF it is to live New Orleans. (I love you New Orleans, I hate you Orleans Parish and insurance companies).

However, hoffse, I was excited to see your post because I know you and hubby have been thinking about buying a house for awhile. Are you still thinking about the one you wrote a post about a month or two ago?

But hence my disclaimer of what an unusual place I live, before throwing out the numbers. I bought a foreclosure for $82K and my closing costs...not including any of the down payment...were around $11K. Yes, kiddos, you read that right. More than 12%-13% the value of the home. Though, granted, it was a very low purchase price so maybe that is more likely to happen.

Here's why...and some of this may or may not apply to some of you...

My bank required a 12 month escrow for property taxes, home owner's insurance, and flood insurance (required).

Although my home at the time only appraised at $125K, home owner's insurance companies FORCE you to purchase replacement value of the home...not its actual value. I literally was "insurance shopping" who had the lowest per foot construction costs to try and remotely bring my home owner's insurance rates down. Especially because New Orleans has the second highest HO insurance rates in the country (Miami is first). I was still forced to get insurance at a $175,000 level for a house that I was purchasing for only $82K.

In fact, I didn't even get a typical home owner's insurance policy. I got dwelling insurance instead, which basically cuts out the liability coverage. For example, if someone falls on my property and breaks their leg or my dog bites someone, that is not covered under a dwelling policy. My dwelling policy was $1800/year vs. a typical home owner's policy of $2500/year. Now you see the insanity.

Flood insurance was $1300/year because the elevation certificate was 20 years old. I got an updated one at a later time that dropped it to $300/year (phew!), but a new survey was $400 I wasn't going to spend until after I closed. Never mind that...during one of the worst floods in our nation's history (Hurricane Katrina)...this house didn't flood at all.

And the fun doesn't end. Orleans parish is one of the FEW places in the country where you have to pay property taxes at the beginning of the year instead of the end. Because the house had been owned by a bank, there was no homestead exemption and apparently no one had recently disputed the value assessment by the Parish. Which was insanely too high. I closed in the month of May, SOOOO I ended up having to pay back the bank seven months of the grossly inflated taxes that they had already paid PLUS my 12 months of escrow based on the grossly inflated taxes.

I did eventually get back a big chunk of that escrow money once i got my property taxes cut by 2/3rds and my flood insurance cut by 3/4ths...but that all happened many months later (into the next year).

I don't even remember any of the other line items (though I think they were much less than oneplusone's numbers). They were just so negligible compared to the insurance and taxes, lol.

I sure hope none of you experience the "perfect storm" of closing that I had, but let me be an example of some of the curves that can be thrown.

brij2006 · May 2014

@short+sassy I know you were trying to save money, but one of the quickest ways to bankrupt yourself is by not having liability insurance at your home. 1 fall from someone on your property and they're suing you for $100k in medical bills, lost wages, and court fee's. Yes, you're saving $700/year, but you have to save that $700/year over the course of 142 years before you break even with not having liability insurance.

Also, the insurance companies insure at the cost to replace the home from the ground up. That is why they insure it for much more than what you purchased it for, because the cost to build that same home is always more. In the event your home is lost in a fire, a dwelling policy will start at the $175k value you have it insured at, then depreciate from that amount. So if your roof is 10 years old, they will give you the value of what your 10 year old roof was worth (which is usually at least 50% less than what it costs to replace the roof).

Just an FYI. There are many ways to save money when purchasing a home, but insurance is definitely not the smartest area. I don't want someone reading that post thinking that is good advice.

JoanE2012 · May 2014

@hoffse - We paid close to 5 figures for closing costs. When we moved in, we had all the floors refinished (no carpet), all new appliances, new furniture, drainage issues fixed, outdoor stuff (grill, patio set, lawn equipment), etc. Heck, it's a year later and we're still heavily spending!

I think closing costs will be fairly predictable based upon your area and the house you plan on buying. Moving in expenses will depend on the condition of the house and can ultimately be prioritized by immediate need (appliances) vs future want (the floors refinished could always wait, though it was so easy to have them done when the house was empty!).

Flamingo86 · May 2014

Lurker here. Hi!

We paid about 6k in closing costs for a 275k house. When we were house hunting we were hoping the buyer would pay closing costs, but we ended up buying a short sale and had to pay them ourselves.

We had just under 10k saved for moving/upfront house expenses. We only have spent/intend to spend around 3k of that though. We just made a few necessary repairs and bought a lawn mower and misc. stuff like curtains. Also our house came with all the appliances so we lucked out there.

CuriousKiddosMama · May 2014

It's great that you are thinking about this because this was the worst part of my home buying experience. The broker I was working with told me that I would qualify for a teacher/firefighter/police officer program that paid your closing costs, and so all I would have to bring to closing was my down payment. A week before closing he told me I never qualified and closing/down payment was going to cost me 10k. I didn't have that, so I shopped around and found cheaper closing costs at Bank of America because they were my bank and closed with them. But I pretty much cleaned out my savings account, and that sucked. My closing cost % wise were high because I bought a cheap house, and some things are fixed costs- so mine was like 7% of my 75k house.

short+sassy · May 2014

@brij2006...you are absolutely right! That was just something I did for closing. I added the liability portion later. Although this doesn't make sense for most people's situations, I ended up keeping the dwelling policy just the way it was as protection for the house. Then bought a liability portion separately. And a personal possessions policy...basically renter's insurance, although I use it as a homeowner...also separately.

Having the three policies separately saves me over $1200/year than if I had them all together in a typical homeowner's insurance policy.

And I remembered the amounts wrong. The typical homeowner's policy at closing was $3800/yr as opposed to the $1800/yr that I paid...plus all the escrows, so I think I ended up paying almost two years up front. I would have had to had another $3K-4K at the closing table.

I also don't recommend anyone go without the liability insurance. I apologize if my post remotely read that way. Fortunately, for most people in the entire rest of the country, homeowner's insurance...even the standard kind...is only a few hundred bucks a year instead of a few hundred bucks a month (grumble, grumble, grumble), lol.

bparkhur · May 2014

We are about at close at 15k for a 379000 house in south Florida. Puke

sillygoosegirl · June 2014

We spent about $17K on misc home related stuff the first year in our new house (which included $4K for a hot tub and $4K for some work we found out about at the inspection--short sale so we couldn't have the sellers cover it). This didn't include any other major improvements, just little stuff. We haven't tackled the big stuff yet because we suck at making decisions.

But, our house came with all appliances except washer/drier (which we purchased off the previous owners for like $300), and we were moving our of an apartment that was stuffed to overflowing with furniture, so we didn't have to rush out and buy any new furniture.

Most of our closing costs were covered by the sellers/bank, but because of the timing on closing, we had to come up with about 11 months worth of property taxes at closing, which was over $3K.

How much did you save for closing?

Re: How much did you save for closing?

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