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Should you
use a Buyer's Agent
10 Ways to Ease the Home Buying Process
10 Questions to Ask a Home Inspector
5
Property Tax Questions You Need to Ask
10
Questions to Ask Your Lender
10
Things a Lender Needs From You
Common Closing Costs for Buyers
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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.
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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