About Real Estate: Average closing costs on the rise
A new study says that closing costs have climbed an average 8.8 percent in the past year, leaving some buyers scrambling for extra cash before their purchase can be completed.Q. We plan on buying our first home soon. Can you please tell us what is included in closing costs, and how much they are?
A. You have asked a good question. Many buyers, especially those who are planning to buy their first home, focus more on raising the money they need for a down payment, but forget about the thousands of dollars in extra cash they might need to pay for transaction-related expenses to close the deal.
According to the authoritative #147;Real Estate Handbook,#148; closing costs are #147;expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, etc.#148; But even that is an incomplete definition, in part because many lenders constantly are coming up with new charges that push a buyer#146;s transaction costs even higher.
Closing costs vary widely across the nation. Variables include the size of the loan, the borrower#146;s credit record and selected loan program, the bank#146;s internal polices and local taxes or fees levied by both the local and state government.
A study published in late July by Bankrate Inc., a company that tracks mortgage rates and other lending charges, helps to show the state-by-state disparity in closing costs.
Not surprisingly, the highest closing costs for buyers are found in New York. For a typical $200,000 loan, closing costs are $6,183 #8212; and that doesn#146;t even include government fees and the cost of a closing attorney or escrow agent. The Empire State is followed by Texas ($4,944), Utah ($4,906) and California (roughly $4,700).
The least-expensive state to close a $200,000 deal is Arkansas, at $3,378. The nationwide average is $4,070 #8212; up 8.8 percent from a year ago, despite the billions we taxpayers have paid to bail out dozens of the biggest banks.
Although closings costs are hard to figure, a federal law requires lenders and mortgage brokers to provide most borrowers with a good-faith estimate of the expenses #8212; commonly called a GFE #8212; within three days after accepting an application. You can see where your state ranks in Bankrate Inc.#146;s annual survey and find several tips to help slash your closing costs on the company#146;s website, www.bankrate.com.
Q. My landlord is constantly knocking on my door and sometimes even barging in unannounced, saying he needs to make sure that I#146;m taking care of the property. I feel like he#146;s just harassing me. Under what circumstances are landlords allowed to enter a rental?
A. Rental-property laws vary from state to state and often from county to county. But generally, landlords usually can enter only to make repairs, or sometimes simply to determine whether repairs need to be made; in cases of an emergency; or to show the property to prospective new tenants or potential buyers.
Nearly all states usually require landlords to give advance notice of a visit, usually 24 hours, in nonemergency situations. A few states also allow landlords or property managers the right to enter a unit if the tenant is away for an extended period of time, typically seven days.
Your landlord#146;s frequent visits appear to have crossed the line. Call your local rent board or similar agency to see what rules apply in your area. Get a copy of the related ordinances and give it to the man, then politely but firmly tell him that you don#146;t want any further unwarranted visitations.
Q. I want to create the type of living trust that you recently wrote about so my property can pass quickly to my heirs when I die. How much should I expect to pay for its creation?
A. It depends on whether you create the trust yourself or hire a professional to do it for you.
Several easy-to-use trust-making software programs that cost less than $100 are available at computer stores and big electronics retailers. Or you can create the trust online at two of my favorite legal-related websites, nolo.com and legalzoom.com.
The alternative is to hire an attorney or estate planner to create one for you. Many lawyers and planners charge between $400 and $1,000 to create a basic trust, although others charge much more. Make sure the price you#146;re quoted includes not just the initial documents but also any related paperwork, such as transferring the title to your home and other assets into the trust.
Ÿ For the booklet #147;Straight Talk About Living Trusts,#148; send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960
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