What A Property In Myrtle Beach Really Costs

If you are planning to purchase a property in the near future in the Myrtle Beach area, you will likely be elated by the residential and condo prices that you will find on the market. The purpose of this article is to help you prepare for the day in which you close on the sale of that property so that you can begin now to budget accordingly and know the costs involved in the transaction.

The day the property is legally exchanged from seller to buyer is typically referred to as the closing or settlement. A great way to plan for your closing is to review a blank HUD-1 Settlement Statement. The HUD-1 is the standard, federally mandated form that your lender or mortgage broker will provide you by law a few days prior to the closing of the sale. A document that precedes the HUD-1 is the Good Faith Estimate (GFE). The Good Faith Estimate (download sample here) is a snapshot of what you should expect at closing and is provided to you by the lender or mortgage broker when they quote you an interest rate or you apply for a mortgage loan. It is simply an estimate of your settlement charges and loan terms if you are approved for the loan for which you apply.

HUD-1 Settlement Statement

The total purchase of your home will be summarized on page one. A breakdown with an itemized description of the charges can be found in Section L (Settlement Charges). Below is a sample HUD-1 Settlement Statement for you to review:




Here is a breakdown and description of the charges:

Most home sales are conducted with the service of a real estate agent, and often separate agents representing both buyer and seller. Line 700 displays the amount of commission they’ll be paid for their services. In most cases the seller covers this cost.
 
This is the amount that the mortgage lender charges you to process the loan. It is generally one percent (1%) and is calculated as a percentage of your loan amount, not sales price. You will hear this commonly referred to as 0+1 if there is an origination fee or 0+0 if there is not an origination fee. When shopping for a mortgage make sure you get quoted rates for both 0+0 and 0+1 loans and then determine if it makes sense to pay or not pay for an origination fee. This can be determined by taking the fee (one percent of the loan amount) and dividing it by the difference in payment between the two loans. The answer will be the number of months to break-even in consideration of the additional one percent fee. If you will be owning the house for longer than the answer you get, it may make sense to consider getting a loan with an origination fee.
 
This is a fee charged by your mortgage lender in return for lowering your interest rate. This is very similar to the origination fee. The concept is the more points, the lower the interest rate. This is generally referred to as 1+0 or 1+1, which would be one percent discount points and one percent origination fee. You will want to inquire with your tax professional as to the benefits to you paying points. They are currently tax deductible, but please consult with your professional tax advisor to be certain that it can be applied for you.
 
This fee is charged by a state certified and licensed appraiser to provide an estimate of the market value of the property being purchased. The fee is generally $350 to $600 depending on the type of appraisal required by the lender.
 
There are times that a lender will set up a service in which a third party monitors the borrower’s property tax payments to ensure payments are made on time. The cost is generally $30 to $100.
 
Federal law requires that homeowners obtain flood hazard insurance if their property resides in a designated flood zone. To determine whether you need insurance, your lender will obtain a report from the Federal Emergency Management Agency, also called FEMA, indicating whether your property is located within the 100 year flood zone. This fee is based on where (what zone) the property is located within the flood zone.
 
Many lenders charge this fee to cover the cost of an analysis of the risk associated with the loan. This fee can range from $300 to $750. This fee is negotiable with the lender.
 
You will be required to pay the interest per diem from the day you close and fund the loan until the end of the month.
 
If you are required to carry Private Mortgage Insurance, referred to as PMI, your lender may require you to pay the first year’s PMI premium or even a lump sum for the life of the loan. The total amount will depend on your loan-to-value ratio, your type of loan (conventional, VA, FHA), your credit score, and the amount of your PMI coverage. If it is required, plan on anywhere from .5% to 1% of your loan amount.
 
Your lender will likely insist that you pay your first year’s premium for hazard insurance. The cost of the premium will likely depend on the type and condition of the property as well as the level of  your coverage and amount of your deductible.
 
If the lender is carrying an escrow account to pay for your homeowner’s insurance and property taxes, you will be required to fund a reserve of at least three months to cover future payments, in addition to a year’s worth of insurance premiums.
 
Your lender may also require you to fund a reserve of three or more months to cover future payments.
 
This figure will be based on the property. Your real estate agent should be able to provide you a very close estimate of this figure or you can contact the tax assessor’s office (try online) to obtain this figure. Generally the first three months of property taxes are collected.
 
These are fees charged by the attorneys and/or title companies who help transfer property title from the seller to the buyer. Attorney fees are costs for legal services. The fee is likely to range from $500 to as much as $1,500. The title insurance policy fee is the cost for title insurance which protects the lender and you against loss resulting from any defects in the title or claims against the property that were not uncovered in the title search. These fees vary but your real estate agent or title company can provide you with the actual fees.
 
Government recording charges are the fees to record the mortgage with the county where the property is located. Recording the mortgage makes it a public record, thus advising the rest of the world that your lender holds the lien on your property. These fees normally run from $75 to $350.
 
Other fees that may appear in this section include: a survey fee to determine the boundaries of the property. This fee is based on size and location and could range anywhere from $300 to $2,000, with the typical fee about $350. Pest inspection: This cost is between $100 to $200. Other Inspections: Depending on the inspections required by the lender, a standard home inspection is usually one of the reports that is consistently required. This inspection report usually covers the examination of electrical, plumbing, heating, roof, etc. The cost is on average $350.

The Real Estate Settlement Procedures Act (RESPA) requires lenders and mortgage brokers to provide you with a copy of the following publication. It is good information and highly recommended that you read.



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The material provided is for informational and educational purposes only and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

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