There’s a lot to consider when planning to buy a house on St. Croix. Your pre-qualification will help you better understand your price range. However, it’s also important to think about the other out-of-pocket expenses involved in the transaction that won’t be included in your mortgage. Bonnie Rapine of Schaffer Mortgage gave us some insight on closing costs to help you plan for your home purchase.
First, what exactly are closing costs? Closing costs are the fees associated with your purchase. Closing costs may be incurred by either the buyer or seller. On St. Croix, closing costs vary based on the property and type of loan.
Typical St. Croix Closing Costs
Earnest money is a deposit made to show sellers that you are a serious buyer. In a conventional transaction where you will make a 20% down payment, sellers typically like to see 10% as earnest money. This amount will be paid after you sign a purchase agreement and will go toward your down payment at closing. Earnest money is held in an escrow account until it’s time for closing. In most situations, you can get your earnest money back if you discover something about the property during an inspection that leads you to call off the deal.
Shortly after an offer is accepted, a buyer often schedules an inspection. On St. Croix, a typical inspection will cost between $500 and $1,000. A home inspection will help you verify the condition of a property and will bring to your attention any home repairs that are needed.
A buyer will also need to get an appraisal on the property. This is paid for at the time it is ordered and a single-family home appraisal runs about $950. The appraisal confirms the fair market value of the property and is required by a lender.
A real estate attorney will conduct the closing. Fees can range from $2,800 to $3,700, depending on whether or not you are financing your purchase. They include a title search and survey to verify whether the title is clean and confirm where the property lines are and that there are no encroachments. There is an attorney fee for you as the buyer (we close our transactions with attorneys and not title companies here) and the bank also has an attorney if you are financing, which would be your expense as well.
Your first year of homeowner’s insurance is due at closing. Homeowner’s insurance is a bit more pricey on St. Croix than in many stateside locations. It’s safe to estimate about 2% of 80% of the house value or rebuild cost for homeowner’s insurance.
Of course, your down payment, less the earnest money amount put into escrow, is also due at closing.