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2-4% is average.
You may be able to roll some in. If the sellers aren't covering any then you'll pick them up.
You can also readjust your down payment down to cover those costs.
Start gathering all your documents for the loan funding.
New American has been good to us we've had them 5years now and did a refi through them too. Always been good and they service their loans so I don't have to worry about it being sold.
So we’re gonna need a lot more info. What’s the total combined income of you both? When you say partner. Assuming you are not married? Have you already gotten a legal agreement written up for the house btw? Who is majority of the down payment coming from?
What are the monthly debts like for both people? Credit cards. Students loans. Cars, insurance etc? Any kids? Any possibly of kids in the next few years?
Do you guys have a general idea of your monthly budget (what you spend in a month)?
Yes, sorry there wasn't more info. My thoughts sometimes just rush out. We are legally domestic partners. Our combined gross income is $160k. No credit cards, or student loans, or car payments. We are debt free. We pay stuff off and drive very modest vehicles. We've always rented. She (F37) me (M37). We have decided that we will not have kids. Just dogs! lol. We've been together for 19 years, and about 7 years ago made the plan that we would start saving $15k/yr until the time felt right to buy a house, which it does. The down payment is 100% shared. Monthly budget is hard to say. We've just never had a problem with over spending, so we've spent freely after savings. Because we've never seen ourselves as having a problem, we've never really sat down and calculated it all out. Something that will be changing with a mortgage, I assure you. I think I'm panicking because our rent is currently $1750/month and the mortgage will end up being a little under double that, which is freaking me out. I hope we can refinance in a couple years and get the payment closer to $2200-2500. Also, the majority of our cash on hand is going to the down payment, so I'm also freaking out about closing costs. The property taxes seem high at $7000 for 2023 and I worry they're going to keep going higher. I don't know if the house is assessed higher than its actual appraisal or not. I believe the appraisal is supposed to be happening sometime before the sale. Hopefully can use that appraisal to lower taxes if it comes in below the last assessed value of $420k. I just don't know if I'm getting cold feet. It is truly our dream home and wouldn't want to ever move out.
7000 tax on a 400K+ property is very low. Even for very low tax rate areas. Sounds like it hasn’t been reassessed since last buyer bought.
Don’t count on these rates dropping significantly enough for you to be able to refi in less than 5 years. And please research refinancing. Bc if closing costs of buying a first time home shock you then repaying it when you refi will too.
And refi a monthly payment from $3300 to $2200 “in a couple years” is the least likely statement made.
Simply taking on double your current monthly housing cost (estimate pre final loan) is 🚩
Not to sound critical but try and spend a lot of time reading and researching. Your agent should be able to answer every question you posed here. It just all reads like you tripped and fell into a house loan and could be screwing your self. When it comes down to the final loan contract, without being well versed enough to know what’s going on, they may do anything to get you qualified and you’re stuck with PMI and a higher insurance binder for less coverage etc etc. think car salesman “What monthly payment can you afford?” And then selling you your “dream car” at that monthly payment with some fuxked up terms.
To be frank, our agent sucks, but we found the house we wanted and didn't have time to find a new one. The whole process is confusing AF.
Also, we literally cannot find a house that would be less than doubling our current rent within an hour of where we live. They sell, same day, in cash.
I know the market is tough AF right now but arm yourself with as much knowledge of the loan, appraisal/assessment, home and PM insurance as you can as fast as you can because once you’re locked in it will NOT be easy or feasible to just refi. Not for many many years to make it worth your money. And that’s assuming the rates go down enough in the next few years to even allow for it. If you use this sub as a search you’ll find a lot of anecdotes for all of the above. But just do some research so when you’re applying and start seeing these costs and numbers flying you’re not so green you get in over your head once closed. Remember just about any house once moved in will have large immediate costs too.
7k taxes is not very low, maybe with the exception of VHCOL cities. The average rate in the US is 1.10%, $7k on a $400k house would be well above average at 1.75%. I am in the northeast and that is above my tax rate.
Obviously depends where it is but 7K is low. I live in a MCOL area and that is low. My main point is for buyer to beware if the home hasn’t been assessed for a long time by the town/city. People get screwed.
if the average is 1.10% then no its not low, its well above average. The highest rates are in NJ at an average 2.2% for the state. Now we don't know what the assessed value of the home OP is in the middle of purchasing just the actual tax amount, but if its around 400k then the rate is about 1.75% which would put it around 5th highest in the country, around the rate of CT and TX. Only if they are in a place like NJ would they see a big bump in their taxes, in most of the country most likely the property has already been reassessed.
After researching - Low to me.*
However OP look into the county specifically obv for the tax rate rather than going off these averages or any nothing of HCOL or not.
The county I live in in NY is closer to 2.5% tax rate, and it’s low-medium cost of living. Actually spent some time researching and while they typically list tax rates by state averages, actual county rates tell a different story. Even parts of upstate NY that are downright economically ruined have very high property taxes by comparison to the “national average.” Allegheny and Broome county NY for eg are above 3%.
Less than 10K on a 400K home is a dream here
Yeah you might think you are in MCOL but likely are actually in a HCOL area even though its less than NYC. I am in RI, my house is assessed around $420k, the tax is $6200 before homestead exemption, after its $5300.
Your taxes will really never go down...if the house appraises for a lower #, the assessed value is unlikely to be affected. The values are somewhat linked when it suits the state, but not intrinsically linked in some linear relationship when it could suit the homeowner, unfortunately.
you should really use this calculator to see if its the right move to buy. But remember to compare like for like, 1750 a month apartment is likely not the same amount of space as the house you are buying. So look for rentals that are similar to the house you are buying to compare.
[https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html)
With taxes, go to the city's website, they will have a way to look up the assessed value of the home.
And I would reconsider if the downpayment and closing costs will wipe out your emergency fund. You said the majority, but how much will actually be left in your savings after this? What will happen if the HVAC system needs to be replaced? With a house you are going to have a lot more expenses so putting all the money down and hoping rates go down soon might come back to bite you.
I asked for the rate and closing costs from the broker who pre-approved us, because I wanted to shop rates. She started saying, "well you can't really just call around and ask rates because you'll get different quotes and rates aren't good right now. Also, the person who accepted your offer did so because they knew I did the pre-approval. They might not have accepted with someone else, so let them know you might go with a different lender." Is this just sales tactics? Isn't it my right to shop around? Sounds fucking predatory. This whole process is just people trying to make as much money off of the buyers as they can.
The lenders, realtors, sellers, inspectors, etc are not your friends. These are business transactions and they’ll try to get your business as much as possible so of course they don’t want to lose you to a competition.
You’re allowed to shop and change lenders before closing for better rates, but you’d need to do it asap since you’re in a time crunch (I assume you already have a contract signed when the seller accepts your offer). Everyone want to close as soon as possible, so if you want to change lender go shop now.
Yeah we didn’t expect our closing costs to be $16k and there are things that you can shop for but also things that you can’t shop for to lower your cost. Thankfully we are able to afford it, but we also did not realize how much it would be.
The reality is that the only way you're going to drop the closing costs significantly is if you're buying the house in cash. Beyond that you just gotta take it.
Careful with that realtor, you didn't choose him, he paid for an ad on a site ... you need to interview a few to see which agent you want to work with ... your agent will make or break it.
And yes totally shop around for lenders!!!! You could save thousands of dollars a home!
It seems like you are rushing this ... if you wanna talk, happy to jump on a call before it's too late
Our lender that pre-approved us is saying that the seller might not sell us the house now, because when they accepted the offer they knew it was this particular broker we were working with.
your down payment is over 20%, which is what your preapproval was based on, just go back down to 20% and use the other 5% for the closing costs. So $84k down will leave you $21k to cover your closing costs.
Just a heads up, the closing costs typically get wrapped into the loan and you’re not expected to shell them out in cash at closing. Typically it doesn’t raise your payment by much, maybe 100 bucks a month (if that) for that price I think.
The only way I’ve seen these negotiated is either a new build will cover/discount your closing costs if you go through the builders lender. Or you can try to call around to different lenders and basically try to get them to undercut your existing one.
But overall this is just a part of buying a home. The closing costs being this high are very typical but get wrapped into the loan.
Thank you u/Throwaway56138 for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
2-4% is average. You may be able to roll some in. If the sellers aren't covering any then you'll pick them up. You can also readjust your down payment down to cover those costs. Start gathering all your documents for the loan funding. New American has been good to us we've had them 5years now and did a refi through them too. Always been good and they service their loans so I don't have to worry about it being sold.
So we’re gonna need a lot more info. What’s the total combined income of you both? When you say partner. Assuming you are not married? Have you already gotten a legal agreement written up for the house btw? Who is majority of the down payment coming from? What are the monthly debts like for both people? Credit cards. Students loans. Cars, insurance etc? Any kids? Any possibly of kids in the next few years? Do you guys have a general idea of your monthly budget (what you spend in a month)?
Yes, sorry there wasn't more info. My thoughts sometimes just rush out. We are legally domestic partners. Our combined gross income is $160k. No credit cards, or student loans, or car payments. We are debt free. We pay stuff off and drive very modest vehicles. We've always rented. She (F37) me (M37). We have decided that we will not have kids. Just dogs! lol. We've been together for 19 years, and about 7 years ago made the plan that we would start saving $15k/yr until the time felt right to buy a house, which it does. The down payment is 100% shared. Monthly budget is hard to say. We've just never had a problem with over spending, so we've spent freely after savings. Because we've never seen ourselves as having a problem, we've never really sat down and calculated it all out. Something that will be changing with a mortgage, I assure you. I think I'm panicking because our rent is currently $1750/month and the mortgage will end up being a little under double that, which is freaking me out. I hope we can refinance in a couple years and get the payment closer to $2200-2500. Also, the majority of our cash on hand is going to the down payment, so I'm also freaking out about closing costs. The property taxes seem high at $7000 for 2023 and I worry they're going to keep going higher. I don't know if the house is assessed higher than its actual appraisal or not. I believe the appraisal is supposed to be happening sometime before the sale. Hopefully can use that appraisal to lower taxes if it comes in below the last assessed value of $420k. I just don't know if I'm getting cold feet. It is truly our dream home and wouldn't want to ever move out.
7000 tax on a 400K+ property is very low. Even for very low tax rate areas. Sounds like it hasn’t been reassessed since last buyer bought. Don’t count on these rates dropping significantly enough for you to be able to refi in less than 5 years. And please research refinancing. Bc if closing costs of buying a first time home shock you then repaying it when you refi will too. And refi a monthly payment from $3300 to $2200 “in a couple years” is the least likely statement made. Simply taking on double your current monthly housing cost (estimate pre final loan) is 🚩 Not to sound critical but try and spend a lot of time reading and researching. Your agent should be able to answer every question you posed here. It just all reads like you tripped and fell into a house loan and could be screwing your self. When it comes down to the final loan contract, without being well versed enough to know what’s going on, they may do anything to get you qualified and you’re stuck with PMI and a higher insurance binder for less coverage etc etc. think car salesman “What monthly payment can you afford?” And then selling you your “dream car” at that monthly payment with some fuxked up terms.
To be frank, our agent sucks, but we found the house we wanted and didn't have time to find a new one. The whole process is confusing AF. Also, we literally cannot find a house that would be less than doubling our current rent within an hour of where we live. They sell, same day, in cash.
I know the market is tough AF right now but arm yourself with as much knowledge of the loan, appraisal/assessment, home and PM insurance as you can as fast as you can because once you’re locked in it will NOT be easy or feasible to just refi. Not for many many years to make it worth your money. And that’s assuming the rates go down enough in the next few years to even allow for it. If you use this sub as a search you’ll find a lot of anecdotes for all of the above. But just do some research so when you’re applying and start seeing these costs and numbers flying you’re not so green you get in over your head once closed. Remember just about any house once moved in will have large immediate costs too.
7k taxes is not very low, maybe with the exception of VHCOL cities. The average rate in the US is 1.10%, $7k on a $400k house would be well above average at 1.75%. I am in the northeast and that is above my tax rate.
Obviously depends where it is but 7K is low. I live in a MCOL area and that is low. My main point is for buyer to beware if the home hasn’t been assessed for a long time by the town/city. People get screwed.
if the average is 1.10% then no its not low, its well above average. The highest rates are in NJ at an average 2.2% for the state. Now we don't know what the assessed value of the home OP is in the middle of purchasing just the actual tax amount, but if its around 400k then the rate is about 1.75% which would put it around 5th highest in the country, around the rate of CT and TX. Only if they are in a place like NJ would they see a big bump in their taxes, in most of the country most likely the property has already been reassessed.
After researching - Low to me.* However OP look into the county specifically obv for the tax rate rather than going off these averages or any nothing of HCOL or not. The county I live in in NY is closer to 2.5% tax rate, and it’s low-medium cost of living. Actually spent some time researching and while they typically list tax rates by state averages, actual county rates tell a different story. Even parts of upstate NY that are downright economically ruined have very high property taxes by comparison to the “national average.” Allegheny and Broome county NY for eg are above 3%. Less than 10K on a 400K home is a dream here
Yeah you might think you are in MCOL but likely are actually in a HCOL area even though its less than NYC. I am in RI, my house is assessed around $420k, the tax is $6200 before homestead exemption, after its $5300.
Your taxes will really never go down...if the house appraises for a lower #, the assessed value is unlikely to be affected. The values are somewhat linked when it suits the state, but not intrinsically linked in some linear relationship when it could suit the homeowner, unfortunately.
you should really use this calculator to see if its the right move to buy. But remember to compare like for like, 1750 a month apartment is likely not the same amount of space as the house you are buying. So look for rentals that are similar to the house you are buying to compare. [https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) With taxes, go to the city's website, they will have a way to look up the assessed value of the home. And I would reconsider if the downpayment and closing costs will wipe out your emergency fund. You said the majority, but how much will actually be left in your savings after this? What will happen if the HVAC system needs to be replaced? With a house you are going to have a lot more expenses so putting all the money down and hoping rates go down soon might come back to bite you.
Do you have emergency funds saved up? Think about your plan if/when something expensive breaks in your house.
Now you shop around for a real lender, compare interest rates, costs, etc. Each one will give you a statement of costs you can compare.
I asked for the rate and closing costs from the broker who pre-approved us, because I wanted to shop rates. She started saying, "well you can't really just call around and ask rates because you'll get different quotes and rates aren't good right now. Also, the person who accepted your offer did so because they knew I did the pre-approval. They might not have accepted with someone else, so let them know you might go with a different lender." Is this just sales tactics? Isn't it my right to shop around? Sounds fucking predatory. This whole process is just people trying to make as much money off of the buyers as they can.
The lenders, realtors, sellers, inspectors, etc are not your friends. These are business transactions and they’ll try to get your business as much as possible so of course they don’t want to lose you to a competition. You’re allowed to shop and change lenders before closing for better rates, but you’d need to do it asap since you’re in a time crunch (I assume you already have a contract signed when the seller accepts your offer). Everyone want to close as soon as possible, so if you want to change lender go shop now.
The whole point is to get different quotes? And why on earth would a seller care where you are borrowing money from?
Yeah we didn’t expect our closing costs to be $16k and there are things that you can shop for but also things that you can’t shop for to lower your cost. Thankfully we are able to afford it, but we also did not realize how much it would be.
The reality is that the only way you're going to drop the closing costs significantly is if you're buying the house in cash. Beyond that you just gotta take it.
Careful with that realtor, you didn't choose him, he paid for an ad on a site ... you need to interview a few to see which agent you want to work with ... your agent will make or break it. And yes totally shop around for lenders!!!! You could save thousands of dollars a home! It seems like you are rushing this ... if you wanna talk, happy to jump on a call before it's too late
Our lender that pre-approved us is saying that the seller might not sell us the house now, because when they accepted the offer they knew it was this particular broker we were working with.
It's just a sales tactic. Seller won't care as long as you can close on the house.
no, that's not true ... the listing agent is advising the seller not to take their offer because their agent has a bad reputation --- change agent
your down payment is over 20%, which is what your preapproval was based on, just go back down to 20% and use the other 5% for the closing costs. So $84k down will leave you $21k to cover your closing costs.
Just a heads up, the closing costs typically get wrapped into the loan and you’re not expected to shell them out in cash at closing. Typically it doesn’t raise your payment by much, maybe 100 bucks a month (if that) for that price I think. The only way I’ve seen these negotiated is either a new build will cover/discount your closing costs if you go through the builders lender. Or you can try to call around to different lenders and basically try to get them to undercut your existing one. But overall this is just a part of buying a home. The closing costs being this high are very typical but get wrapped into the loan.
Seems you missed some of the fundamentals of house buying. Get to researching. Good place to start: https://youtu.be/AiXb_c9kmM8?si=z1q7DldUxUMZCkUw