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Common
Closing Costs for Buyers
The lender must disclose a good
faith estimate of all settlement costs. A check to
cover your closing costs will probably have to be a
cashier’s check. The title company or other entity
conducting the closing will tell you the required
amount for:
- Downpayment.
- Loan origination fees.
- Points, or loan discount fees you pay to
receive a lower interest rate.
- Appraisal fee.
- Credit report.
- Private mortgage insurance premium.
- Insurance escrow for homeowners insurance, if
being paid as part of the mortgage.
- Property tax escrow, if being paid as part of
the mortgage. Lenders keep funds for taxes and
insurance in escrow accounts as they are paid with
the mortgage, then pay the insurance or taxes for
you.
- Deed recording fees.
- Title insurance policy premiums.
- Survey.
- Inspection fees—building inspection, termites,
etc.
- Notary fees.
- Prorations for your share of costs such as
utility bills and property taxes.
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A Note About Prorations.
Because such costs are usually paid on either a
monthly or yearly basis, you might have to pay a
bill for services used by the sellers before they
moved. Proration is a way for the sellers to pay you
back or for you to pay them for bills they may have
paid in advance. For example, the gas company
usually sends a bill each month for the gas used
during the previous month. But assume you buy the
home on the 6th of the month. You would owe the gas
company for only the days from the 6th to the end
for the month. The seller would owe for the first 5
days. The bill would be prorated for the number of
days in the month, and then each person would be
responsible for the days of his or her ownership.
What to Keep From Your Closing
- The Real Estate Settlement Procedures Act (RESPA)
statement. This form, sometimes called a HUD 1
statement, itemizes all the costs associated with
the closing. You’ll need for income tax purposes
and when you sell the home.
- The Truth in Lending Statement summarizes the
terms of your mortgage loan.
- The mortgage and the note (two pieces of
paper) spell out the legal terms of your mortgage
obligation and the agreed-upon repayment terms.
- The deed transfers ownership of the property
to you.
- Affidavits swearing to various statements by
either party. For example, the sellers will often
sign an affidavit stating that they have not
incurred any liens on the property.
- Riders are amendments to the sales contract
that affect your rights. For example, if you buy a
condominium, you may have a rider outline the
condo association’s rules and restrictions.
- Insurance policies provide a record and proof
of your coverage.
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Equal Housing Opportunity |
Smitha Ramchandani
Broker-Salesperson | Weichert Realtors
73 Washington St | Morristown, NJ 07960
Mobile)
973-953-7777 | Office) 973 455-1900 Ext. 122
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Copyright Notice:
Morris-Homes.com is a registered service mark. The
information contained in this site is for general
consumer use only. While all information is deemed
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copied or reproduced without the express written consent
of Smitha Ramchandani. All rights reserved. © 2006.
By submitting
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