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Understanding The Closing Process And Its Costs

PLANNING ON BUYING REAL ESTATE IN THE ROSARITO BEACH AREA?

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Closing a real estate transaction in any country can be complicated, closing a real estate transaction in a foreign country, such as Mexico, can be even more complicated and intimidating. You don't know what you don't know.

That is why it is important to have a professional closing service help you complete your real estate transaction, to make sure the process goes as smoothly as possible and at an affordable rate.

Closing costs must be considered in addition to your downpayment to determine the total funds required to close. Closing costs in Mexico can range between  6%-8% or more of the purchase price.

You might be saying to yourself "wow, why so much". Well there are many things that can affect your closing costs, from where the property is located, citizenship of the buyer, the bank used to set up the trust, if the trust is being transferred or a new trust is being set up, which Notario is being used and so on. It is important not only to use a professional closing company but to have a trained real estate agent help you negotiate your closing fees. A well trained real estate agent will know which fees are negotiable and which are a fixed cost.

Even though these fees may seem high, we have found that in the long run these fees add up to less money when you consider property taxes. In Mexico, unlike the U.S., they charge most of their fees upfront and charge you very low property taxes. The way to look at it is you pay a little bit more up front so you don’t have to pay a lot over the long term. Unless you plan on flipping your home, you will come out with a huge saving in the long run.

1. Bank Trustee Fees:

 

These are charged on a yearly basis and are paid upfront. They may vary according to the transaction, the property and the trustee bank; nonetheless most of them charge around $600 for properties priced under $700,000. For properties priced over that the fees will increase accordingly. In Addition to this, all the trustee banks collect the following:

Trust Acceptance Fee – This is a one-time initial fee to set up your Trust. This is a one-time charge and the fee varies by banks. For example, a bank could charge $500 USD + IVA (16% tax) so the fee would be $580.

Trust First Year Fee – There is an annual fee charged by the bank to maintain the Fideicomiso. This is paid in advance, so you have to pay for your first year at closing.

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