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Author: crackdclaw Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127777  
Subject: Re: When can I qualify for a loan? Date: 4/26/2013 6:04 PM
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Rule of thumb: the overall costs to *buy* a house are 5% of the price.

Always willing to learn something new. Will you walk me thru how a home purchase has a 5% cost? Perhaps on a $50K to $100k home purchase, but I really don't see 5% at any price point above that.

Washington D.C. has a pretty high transfer tax of 1.1% of purchase price, paid by both seller and buyer. For a buyer getting a mortgage, throw in some bank fees, appraisal, inspection, and title fees, then you *might* be looking at 2.0% of the sales price.

Most buyers in DC/MD/VA are told to expect a *cost* 3 to 3.5% of sales price, but those are not all *costs*, they include prepaids, which includes paying up front for a year of home insurance and prepaids to establish an escrow account for taxes and future renewal of homeowner's insurance. You do know when you sell, or payoff the mortgage, the prepaids are refunded? So, how are you possibly getting to 5% cost for a home buyer?

Are transfer taxes really that higher in other parts of the country? I originate about 15 to 20 loans for past clients transferring out of the D.C. metro area to other states, my experience is that transfer taxes are less elsewhere than here. I was impressed by a Colorado purchase at a sales price of $600,000. and total closing costs to buyer by state and local govt. of less than a $1,000. For that buyer, closing costs were less than .5% of the purchase prices, so maybe I misread your post and you meant .5 not 5.0%.
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