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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
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Inspection
fees—building inspection, termites, etc.
-
Notary fees
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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.
Reprinted
with permission from Real Estate Checklists and Systems,
www.realestatechecklists.com.
Reprinted
from Realtor(R)Magazine Online permission of the NATIONAL
ASSOCIATION OF REALTORS(R) Copyright 2005. All rights
reserved.
www.realtor.org/realtormag.
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