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:
-
Down
payments
-
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 five 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.
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