The Cost of Buying a Home in Summit County
If you’ve ever purchased a home you have a good idea as to what the closing costs will look like from a buyer’s standpoint. For the most part the town of Breckenridge and neighboring towns will not be much different except the town transfer tax. To avoid a stressful and embarrassing moment at the closing table one should do some prior research as to what they should expect. For a more detailed evaluation or an estimated closing cost calculation please contact a Paffrath & Thomas Broker. Below is a breakdown of the most common closing costs associated with buying a property in Summit or Park County.
For the most part, it is impossible to predetermine the costs associated with a loan. Each lender will charge a different amount for origination, credit reports, escrows, etc…. Be aware of lenders with high fees! If you would like recommendations for competitive and reliable local lenders please contact us or read more about mortgage lending basics.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance (called PMI) is required if your down payment is less than 20%. Private Mortgage Insurance is typically included as part of your monthly loan payment. This amount will be determined by your lender upon loan application and approval.
The appraisal will be ordered by the lender to determine that the property is worth fair market value. This fee will often be tied in with the other lender fees.
Part of the real estate purchase contract is an option for a buyer to inspect the property. At Paffrath & Thomas we always recommend hiring a licensed and qualified inspector to evaluate the home for safety, health, and structural concerns. The inspection fees will vary depending on the square footage and the type of inspection ordered but they will generally run a few hundred dollars.
During the inspection process the buyer will have the option to test the home for radon gasses. Radon is an odorless radioactive gas that is emitted from uranium deposits. Radon gases will typically seep through the soil to the surface, often leaking through small seams or cracks of the home. Given the natural geology of the Rocky Mountains we have a strong presence of radon and strongly recommend all of our buyers have it tested. In the event that radon gasses exceed the current legal limit, buyers will have the right to negotiate a mitigation system. Radon mitigation usually consist of a process called sub-slab depressurization. This process seals off the home with an impermeable layer in the sub-floor and vents the toxic air away from the home. For more information regarding radon gas please call Paffrath & Thomas, we would be happy to recommend a qualified professional.
In the town of Breckenridge, Frisco, and Keystone Village there is a Local Transfer Tax. This transfer tax is a negotiable item although it is most often seen as a buyers cost. For the most part there is only a 1% transfer tax but in Keystone Village and some select subdivisions in the county there is a 2% transfer tax. Call a Paffrath and Thomas Broker to find out more regarding transfer tax and how it can be negotiated. Keep in mind this transfer tax is only when the property ownership is transferred.
In every purchase agreement the buyer must pay an earnest money deposit once all parties have reached mutual acceptance on the purchase. Earnest money is typically 1% to 3% of the purchase price but can always be negotiated. The amount you pay in earnest money will be credited towards your closing costs, reducing the total amount you owe at closing. To find out more about Colorado contracts and the handling of your earnest money please contact us.
Homeowner’s Association Dues
If the property you are purchasing has a homeowners association (or HOA), you will often pay one month’s dues upfront at closing. In some cases, an HOA will require three months of HOA dues that will be applied to a working capital fund. Depending on the HOA, all or some of that money will be refunded when you sell the property. Homeowner’s association dues vary by property and will often cover maintenance fees, insurance, utilities, and operation costs but they are all different and have their own operating procedures. Paffrath & Thomas can provide you with specific HOA information if desired.
The type of property you purchase will dictate the type of insurance you will need. Many condos and townhomes will require HO6 policies that ensure you from the walls-in on your property. Often times these policies are fairly inexpensive. If you are looking at single family homes you will want to keep in mind that your insurance rate will vary on many things including proximity to town, fire hydrants, type of roof, etc. Although we do not have to worry about hurricanes, typhoons or tornadoes, some insurance companies do want to take on the risks associated with wildfires. Depending on your lender, homeowner insurance premiums for the year may be included in your closing costs.
In the state of Colorado, our property taxes are always paid in arrears. Depending on when you purchase the property you will likely see a credit from the seller for the portion of the year that they owned the property. The Title Company will prorate the taxes to the day of closing and the credit will be reflected in your Settlement Statement. If you have questions regarding our taxes in Colorado please don’t hesitate to contact us.
Furniture & Finishes
Depending on the property and the situation, you may find yourself buying a fully furnished property. Many properties in Breckenridge and the surrounding areas will be sold fully furnished. When it comes time to negotiate on a property let a Paffrath & Thomas Broker help you negotiate the terms of the deal including the furniture and other home finishes.
Although this cost won’t be reflected on your Settlement Statement, this is a cost you will not want to forget. Here at Paffrath & Thomas we always recommend purchasing a season ski pass to enjoy the world-class ski resorts in your new backyard including Breckenridge, Keystone, Copper, Loveland, Vail, Beaver Creek, and Arapahoe Basin. Check out the Epic Pass or the Ikon Pass.