Expert: Sue Bernstein - 2/8/2012

Question
Hello-
I just had a question about the costs of upgrading to a new house when you outgrow your current one.  We have been in our house just about a year, but feel it may be too small soon (more kids coming) and we may need to get a bigger one is a few years.  We bought it for $200,000 and put $40,000 down.  I am just wondering about estimated cost if we were to get a new house after such a short time.  Say we found another house for about the same price or slightly higher.  Would the estimated realtor fees of, say $10,000 (5% of the purchase price) and the estimated $4000 closing costs on the new house have to be paid out of pocket, or would they be part of the new loan that we get?  Does having more equity in the house make  the costs of getting a new home lower?  We don’t have a lot of money so just trying to figure out how expensive it will be.  Thanks for your help!

Answer
Hi Lisa,

First of all, you do not pay the broker's fee when you purchase.  That is paid by the seller and will only be paid by you on the sale of your existing house.  Closing costs are not paid out of the loan, however you can request the seller pay closing costs as part of your offer.  The limit to the amount you can request is based on the amount of your down payment.  Generally, you will get a better rate with a larger down payment but I recommend you meet with a lender when you are ready to consider the purchase.  It is unclear if you plan on selling your existing house when you will be getting the new home.  If so, any equity with the sale can be used towards the new purchase.  Hope this helps.

Sue Bernstein
Rodeo Realty
www.suebernstein.com