Closing on a Home
Lesson time 07:19 min
Robert guides you through the costs that come with closing on a home and explains the inspection and appraisal processes.
Students give MasterClass an average rating of 4.7 out of 5 stars
Topics include: Save for Additional Costs · The Appraisal Process · What to Expect From the Inspection
[MUSIC PLAYING] - The process of finding your place, your place in the world, it can be very, very daunting. But when you find your place, you feel like you can exhale. There's a nice sense of, on one hand, accomplishment, on the other hand, belonging. When you're looking through the purchase agreement to purchase the home, my advice to you is to ask the agent what you should be looking at and to help them give you context of the actual agreement. There are going to be a lot of terms in there that I'm sure will be unfamiliar to you. Things like title is something that most people don't understand. And what title is-- it is the actual title of the home. Make sure that you're actually buying what you think you are buying and that the person you are buying from actually owns the title on the home and that they are transferring that title to you. And there's something called title insurance as well. And so there's a lot of nuances to the home experience that a real estate agent can help you with. [MUSIC PLAYING] The closing costs of a transaction happen at the closing of the home and can be between 2% to 5% of the total value of the home. So you should factor in all those costs. So one is the down payment. The down payment is the value of the home less the mortgage. Let's just call it $1 million to make it simple. The home is $1 million, and the mortgage is $500,000. That means the down payment is $500,000. But then you have to pay an origination fee for the mortgage. Let's just say it was 1%. So that could be another $5,000. Then you have to pay transfer taxes. In some markets, there will be transfer taxes for real estate. That could be another 1% of the total value of the home. So that's another $10,000. Of course, you have to pay the inspector for the inspection. That could be as little as a few hundred. In some markets, you have to pay for a title. That could be another couple of thousand dollars. You have to pay, of course, your moving expenses. And you have to remember that the costs of buying a home aren't just the cost of the home and those immediate transaction costs. They're also the costs that come afterwards. You may have to paint the walls, finish the floors. You may need new furniture. Most people want to create a new environment to get new furniture that fits for the home in a way that their previous home didn't have needs for. And there are also non-financial costs, the cost of your time. You should expect to spend a significant amount of time to create the move and to set everything up, to pack the boxes. That's a stressful period. You pack all the boxes. And you can do it yourself, or you can hire someone to do it. Those are some of the taxes and the costs that you should be aware of when buying a home. [MUSIC PLAYING] The role of the appraiser is to appraise the value of the home. And the appraisal value of the home is different than the actual value that you pay for. The appraisal v...
About the Instructor
As the CEO and founder of Compass, Robert Reffkin has used modern technology to revolutionize the real estate industry in the U.S. Now he’s demystifying the ins and outs of the American home-buying process and sharing tools that will help you buy or sell a home with confidence. Learn how to approach your search, choose an agent, make an offer, and more. Your future home is waiting—let Robert help you find it.
Featured Masterclass Instructor
Robert Reffkin, the founder and CEO of Compass, helps you get closer to finding your dream home by simplifying and demystifying real estate.Explore the Class