Closing Costs?

[Bravo7Dash2]

Looking to purchase a home at around $225k. Currently have 13k in cash and another 14k that I can pull from.  Looking to hopefully get a conventional at 3% down. Current mid mortgage score is 660. 

I'd like to take some of the cash and pay off some debt to up my credit score and lower my dti but am afraid I won't have enough cash to close. What is a rough estimate of what I'd need at closing? 

The banks have done a number on my credit card utilization by lowering my limits and closing unused cards. 

[ShanetheMortgageMan]

3% down on $225k is $6,750 but the closing costs can vary widely depending on what county/state you are buying in.  For closing costs the old rule of thumb of 3% of the sales price may apply, but some states such as TX or NY have higher costs where it could be as high as $9-$12k.  

You mention you have $13k cash, like as in bills in a safe or are you talking about in checking & savings?  Where is the additional $14k you can pull from?

[Bravo7Dash2]

I have 13k in a savings account and 30k in an old retirement account I can pull from that's separate from my current pension.  I know lender fees will vary.

[markbeiser]

My experience with closing costs on the 3 homes I've bought in my life is that they will be whatever you've got, minus enough for a couple weeks of groceries!🤣

[ShanetheMortgageMan]

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@Bravo7Dash2 wrote:

I have 13k in a savings account and 30k in an old retirement account I can pull from that's separate from my current pension.  I know lender fees will vary.

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Savings & retirement are acceptable sources of any funds due from you during the transaction, so you should be covered.  In the latter half of 2022 a lot of real estate markets have turned from sellers markets to buyers markets, so it may be possibleto negotiate the seller giving you a closing cost credit into your offer and reduce your funds due at closing.  Since you are planning on putting 3% down I'd work to get your mid score up to the 700+ level as you'll get a nice break on the amount of PMI you'd have to pay.

[MauiMan85297]

Exactly what @ShanetheMortgageMan said paying down/off your debt to raise the score as the Conv loan's PMI is based off LTV (loan to value) which is high and your score (which is considered low for CNV @ 660).  You want to tackle the credit card debt that will give you the highest unused portion of debt.

Ex:  Credit Limit: $5,000 Bal: $3500=70% of credit limit being used, if you have the funds then best to pay it down to under 10% which would be $499, if funds are tight then try for under 32.5% of the CL.

Lastly, if you have enough to pay off all CC debts then leave one account with a small balance like $30 to maximize credit scores.