![]() Lender's Mortgage Insurance – If your down payment is 20% or less, many lenders require that you purchase Private Mortgage Insurance (PMI) for the loan amount. Lenders want to be sure the property is worth the value of the mortgage loan. Land Survey – Lenders may require that the property be surveyed to ensure it has not been encroached and to verify the buildings and improvements to the property.Īppraisals – Professional Appraisers can do a comparison of the value of the property to that of other recently sold neighborhood properties. This is usually done for fixed mortgages or adjustable mortgages. Preparation of Amortization Schedule – Some lenders will prepare a detailed amortization for the full term of your mortgage. Lenders may charge for this, or the fees may be included in the application and/or attorney’s fees. Lender's Attorney's Fees – For your attorney to draw-up documents and to ensure that the title is clear, and for representation at the closing.ĭocument Preparation Fees – There are several documents and papers prepared during the home-buying process ranging from the application to the closing. Different deductibility rules apply to second home loans. If you pay the points up front they are tax deductible in the year they are paid. Some lenders will let you finance points which will add to the mortgage cost. Points can be shared with the seller which is negotiable in the purchase offer. Points – One point is equal to 1% of the amount borrowed and can be payable when the loan is approved either before or at closing. This fee is often a part of the origination fee. Origination Fee – For processing the mortgage application there may be a flat fee, or a percentage of the mortgage loan.Ĭredit Report – Most lenders require a credit report on you and your spouse, or an equity partner. The commission is negotiable between the seller and the agent. Real Estate Agent's Sales Commission – The seller pays the real estate agent's commission, and if one agent lists the property and another sells it, the commission is usually split. ![]() This insures that the investment will be secured even if the property is destroyed. Homeowner's Insurance – Most lenders require you prepay the first year's premium for homeowners insurance, sometimes called hazard insurance, and must show proof of payment at the closing. Or you may work with a title company to verify a clear property title. Title Search Costs – Usually your attorney will perform or will arrange for the title search to ensure there are no obstacles such as liens or lawsuits regarding the property. They usually charge a percentage of the selling price up to 1%, or some work on an hourly basis or for a flat fee. There may be expenses paid to others like agents, attorneys, inspectors or insurance firms, even if you paid cash for the property:Īttorney Fees – You may want to hire an attorney when purchasing a home. Your representative will deliver the check to the seller, and then give the keys to you. In most states the settlement is completed by a title or escrow firm in which you forward all materials and information plus the appropriate cashier's checks or bank wire so the firm can make the necessary disbursement. Prior to closing you should have a final inspection, or "walk-through" to insure requested repairs were performed, and items agreed to remain with the house are there such as drapes, lighting fixtures, etc. You may or may not be involved in some of the closing activities it depends on who you are working with. Most paperwork in closing or settlement is done by attorneys and real estate professionals. ![]() ![]() Closing can take anywhere from 1-hour to several depending on contingency clauses in the purchase offer, or any escrow instructions needing to be executed. ![]() Your Closing may include some or all of these entities: real estate agents, your attorney, the seller’s attorney, lender's representative, title and escrow firm representatives, clerks, secretaries, and other staff. At Closing you and all the other parties in the mortgage loan transaction sign the necessary documents. "Closing" is the last step of buying and financing a home and when the property is officially transferred from the seller to you. ![]()
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