From the category archives:

House Closing Costs

House Closing Costs When Refinancing

The question many of us are asking these days is whether to refinance our mortgage, or wait for better terms or a better rate. While no one can accurately forecast where rates are headed, there are some steps you can take that will help you decide whether to refinance your mortgage now:

First: How much lower are the rates than what you are paying on your existing mortgage? Keeping in mind, especially if you are writing off some mortgage interest on your taxes, that a slight drop in rates may not make it worthwhile to refinance.

Second: If the rate is significantly lower, you may want to check what your monthly savings will be. When doing this, make sure you calculate the new mortgage payment after your refinance without factoring in any years you are adding on to the end. For example, if you owe 27 more years on your current mortgage, calculate your new payment using the new rate and the amount you are refinancing only over 27 years. Otherwise you might think you are lowering your payment more than you actually are, when you are really just adding years onto the end.

Third: So now you know how much you’d save each month on a refinance, but how much are the house closing costs going to be for your refinance? You need to be sure that paying any house closing costs (including points) are worthwhile. Here’s some simple math: If you are paying $2500 in house closing costs, and the reduced rate saves you $500 each year, you’ll need to stay where you are for five years to reap the benefits. For many, house closing costs are worthwhile, but for others who know they will need to upgrade, or have a job situation that can mean having to move, house closing costs may eliminate any benefit of the refinanced mortgage.

Fourth: If you’ve arrived here, you have probably figured that you are saving enough over time to make your new rate and the house closing costs worth moving forward. One last consideration: Do you think you will refinance again? This one may be close to impossible to answer easily, because who knows where rates are going. But, if you think they might go down, make sure you know what your lender’s terms are as far as refinancing. Some lenders will not refinance a mortgage for 90 days after the close of the one you are doing now. Make sure you are getting enough savings to not worry about that.

Fifth, and finally: One last word of caution: Once you lock you may have to pay fees (e.g. for an appraisal) that might not be recoverable if the loan does not go through. One of the biggest issues you could run into is that your appraisal is not high enough to qualify you for the mortgage. You may want to carefully look at comparable sales in your neighborhood, or, even better, talk to someone who is aware of the real estate market in your area, to be sure that your home will be appraised at a high enough value to meet the criteria of your loan.

If you’ve made it this far, you may be inclined to go forward and refinance. Best of luck! Information in this article should not take the place of a conversation with a finance and possible tax professional who is aware of your unique situation.

house closing costs

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Preparing to Buy a Home – House Closing Costs

When purchasing a home, one of the first and most important steps you will want to take in beginning of the home-buying process is speaking with a lender. There are many beneficial reasons for doing this.

First, it will ensure you are looking at homes that are in your price range and that work for your budget. Nothing is more disappointing then falling in love with a house that you can’t afford.

Second, the lender can provide a pre-qualification or pre-approval letter, which will give you more bargaining power when submitting your offer to the seller. The owners will see that you are qualified and financially prepared to buy the house and, as a result, the sellers may be willing to accept a lower offer knowing you are financially ready to purchase their home.

Lastly, you will want to find out from your lender how much you should expect to pay in house closing costs. This information will also be given to you in a good faith estimate provided by your mortgage lender.  In addition to house closing costs, you will want to ensure you have earnest money to accompany the contract along with additional funds for any inspections that you choose to have. It is important to know all of the costs involved when purchasing a home so that you are financially prepared.

Working with a lender who is local to the area where you are purchasing the home is always a good idea as opposed to someone in another city or state. The local lender is typically more familiar with the area which can often lead to having a smoother transaction. There are many local mortgage bankers in the Jackson Hole area that have years of experience assisting their clients in purchasing the perfect home.

Once you’ve been pre-approved, you will then want to determine what area or subdivision best fits your needs. A great way to determine this is to take a drive through the different neighborhoods of Jackson Hole with your real estate agent, so that you can see what each area has to offer. For example: It may be important for your children to be close to school or for you or your spouse to be close to work. Once you have determined the price range you need to stay in and what area best fits your needs, have your real estate agent email you listings that match your criteria as soon as they hit the market.

house closing

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Closing on Your New Home

A lot has to happen before you can close on a new home successfully. Some of it is your responsibility, and some of it belongs to others. But don’t expect it to happen overnight or perfectly smoothly. There are too many factors involved. And there’s a lot of money riding on the deal, too—not all of it yours. So the wisest thing to do is take care of everything at your end; dot every “i” and cross every “t” that you can from your end of things. And be picky, picky, picky about who you’re doing business with; from the get-go, choose only the most experienced, successful professionals and companies that you can find. They have what it takes to make the long, complicated process considerably more bearable. For example, if it’s possible, it’s a good idea to go with a Texas-based lender, because of Texas real estate laws, some of which differ from that of some other states. An out-of-state lender might make some mistaken assumptions that could add to delays.

For most homebuyers, pre-qualifying for a home loan and signing a contract are major steps. But that’s just the beginning of the journey towards home ownership. And the rest of the trip can sometimes make or break the deal. It’s during this period that the lender is trying to complete the financial package, the title company is doing the necessary research, surveys and appraisals are put into motion, and the homebuyer orders home inspections and obtain homeowners insurance. Anything that goes wrong at any of these stages could mean delays—or even a broken deal.

As a homebuyer, you need to know that pre-qualifying for a mortgage loan—and actually qualifying for it—are two very different things. You also need to know that the difference between the two can definitely affect the closing date. To get pre-qualified, a homebuyer must meet with the lender and have essential information (Social Security number, income, etc. at hand). Then, after checking your credit score, income, and employment, the mortgage lender writes up a document—based upon this preliminary information—that states what size of loan you might qualify for. Remember, this is not a final conclusion or a mortgage loan approval—it’s really only the lender’s “educated guess”—so don’t start counting your chickens just yet! As a matter of fact, many lenders these days are encouraging homebuyers to skip pre-qualification and go directly to qualification—before they start looking at homes—or, in many cases, even before the contract is signed.

That’s because the actual qualification process is much, much more extensive and in-depth. Typically, it involves giving the lender accurate information, W2 forms, bank statements, tax returns, and proof of income. All this goes through the lender’s approval process, which can take a fair amount of time. That’s because the up-to-date accuracy of the information you’ve given them is checked and double-checked at this time. So be sure of your facts and figures, because any errors, inconsistencies, credit problems, or misinformation could definitely put a damper on things at this point.

Things a homebuyer should know. Or expect. Or do.

* Lenders should give buyers a good-faith estimate of how much money to bring in—by certified check—to the closing. Closing costs typically run about 3 to 6 percent of the loan amount.

* One business day before closing, you have the right to inspect the Uniform Settlement Statement. This itemizes the costs of all services you must pay at closing.

* The lender is also responsible for giving you a truth-in-lending statement that states all the details about the cost of the loan.

* The title company’s job is to research public records and verify that the buyer and the seller don’t have any lawsuits, liens, or judgments against them or the property.

* One of the real estate agent’s jobs is to stay in contact with the title company during the research phase, just to make sure that any problems that might surface are dealt with promptly. It’s important to avoid last-minute surprises, which could lead to delays on closing.

* Before closing, the smart homebuyer should order inspections on the house and property to make sure that everything is in good shape and that no major repairs are required. Repairs could change the agreed-upon price in the contract. The homebuyer should be there with the inspector when it’s done. Why? Because an inspector’s report can be 10-12 pages long and full of technical jargon, so being there to ask questions and get on-the-spot explanations can really help you get a grip on the situation. The cost of an inspection can vary; it depends on the location of the house, the size of the house, and what kind of foundation it has. By the way, a termite inspection also needs to be ordered by the homebuyer before the closing. If an inspector is not certified in this area, another inspector will have to be hired.

* Homebuyers are responsible for getting homeowners insurance and have proof of it at closing. The Texas Department of Insurance says buyers should expect to pay about $400 to $1,000 a year for insurance—and possibly even more if the home is in a flood zone. Most lenders will recommend an escrow account where funds for insurance and property taxes are automatically set aside each month.

* The lender will require hazard and liability insurance for at least the amount of the loan. At the closing, you’ll be expected to pay the first year’s premium for this insurance.

* The homebuyer should schedule a final walk-through of the house right before the closing. It would be a good idea to do the walk-through with your real estate agent. You want to make sure that the house is in the condition that you agreed upon in the contract. Remember, once the closing is done, you’re the owner of the house—as is. You no longer have any legal power to get the seller to fix anything, and the seller no longer has any legal responsibility to do so.

* A settlement agent—usually the title insurance company—is the one who usually sets the time and place of closing.

house closing costs

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House Closing Costs Can Be Shocking

There are a lot of people who go for a mortgage without understanding some basic fundamentals about mortgages. On top of that, they hire mortgage brokers who are good for nothing). Though mortgages (especially first mortgages) are an emotional thing (on account of the joy of being able to get into your own home), one must not forget that you are going to spend a lot of your hard earned money on fulfilling your mortgage obligations. These are not just in terms of the monthly mortgage payments but also in terms of the down payments and other house closing costs.

So, if your mortgage house closing costs shocked you, it must be because you didn’t calculate these costs properly. Closing costs can sometimes cause a lot of discomfort. Some people forget to include the house closing costs altogether (you can take comfort from the fact that you had at least considered the house closing costs for your mortgage). Such people are in for an even bigger shock than what you got for your  mortgage. Besides payments and other fees, the house closing costs also include pre-interest charges that are calculated by the mortgage lender as the interest from the day your  mortgage was recorded till the end of the month. That means that closing your  mortgage towards the month end would have made much more sense (and averted that shock that you received through your  mortgage house closing costs).

So, evaluate your house closing costs properly.

house closing costs

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House Closing Process – House Appraisal Costs

The actual house closing process is quite the involved undertaking. Typical home buyers do not really know how much goes into the closing of a home beyond the signing of the contracts. Usually the Realtor sees to most of the closing concerns but its a good idea to educate yourself so that you understand your rights regarding the transfer of title and closing of the actual sale. There is a huge amount of paperwork involved in home closing so you will want to have a checklist to ensure that you have everything. The items will look like this:  house appraisal report, home inspection report, proof of the title search, good faith estimate, and the actual contract itself.

As the buyer you have a few responsibilities and an entitlement or two. Of course these are all defined by the contract and the parameters of the offer & acceptance. It’s important to make sure every aspect of the sale is recorded in detail and in writing. Any subjects must be signed off on by both the buyer and seller, this includes anything that is or is not included in the sale. So be clear about what you expect to be included in the deal. Most importantly this is the part of the process where the final version of the contract gets signed by both parties. This will finalize the transfer of the home, leaving only the payment of escrow items and house closing costs outstanding.

The actual house closing happens when all concerned parties gather to finalize the contract. Usually it is quite the gathering, including representatives of the buyer, seller and mortgage provider, title provider, attorneys and so on. This is where the actual finalization and payment of outstanding costs occurs. The end result being that you are deeded free and clear title to the property in question. If you pay close attention to all the steps involved in the process it can be a highly educational process as well as highly rewarding.

house closing costs

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No Cost Mortgage – a Real Deal or Not?

In 2008 we saw mortgage interest rates begin to fall. When mortgage rates fall, misleading mortgage advertising schemes seem to show up in the media all around us. For example, I recently watched an advertisement on Television for “The Real No Cost Mortgage”. I shudder each time I see or hear advertising about this type of mortgage because it is misleading and deceptive. The sadness in this for me as a 12 year mortgage broker veteran is that this type of advertising is indicative the bad apples that contributed to a great degree to the mortgage industry meltdown in 2007. I am going to say it right off the bat: There Are No “No Cost Mortgages” on the Planet!” Is this clear? All mortgages have costs associated with them. This is the end of the story.

Most “no cost mortgage” loan programs are designed the same way: the interest rate of your loan is increased to cover the costs associated with your mortgage. There are a select few mortgages that have very little costs associated with them: these are home equity lines of credit – or HELOCS. Often you can get these little or no cost loans at your local credit union or small community bank. Additionally, these loans typically only allow you borrow up to about 90% of your home’s value. Credit Unions are small enough that they perhaps can offer to pay some of your costs as a courtesy to earn your business. The larger banks simply cannot pay or give you these costs for free or it would set them back a few dollars.

With these small second mortgages and HELOCS aside, the rest of the mortgage market is primarily made up of larger first mortgages. As I previously stated, these mortgages have costs associated with them such as: paying a processor to process your loan, the cost for an appraisal, the underwriter, the title insurance policy, your credit report, tax and insurance escrows, and of course the money that your loan officer makes in commission. All of these fees in one form or another get paid, and guess who pays them? That’s right, you do. You will pay these fees one way or another.

So what is the catch to this type of advertising? As I previous pointed out, the mortgage company charges you a higher interest rate. If you are paying a higher interest rate, then your monthly payment is higher. So your higher payment month after month pays your house closing costs over time. Now, this is not necessarily a bad thing if you know what you are getting into. Where I have a beef with this type of advertising is that it is not telling you the whole truth. You do have house closing costs and the mortgage company is charging you a higher interest rate to compensate for those fees – and they do not tell you this in the advertising. They lead you down some fantasy of a no cost mortgage, or a free mortgage, and ultimately charge you a higher interest rate than you would normally get if you paid your costs either with your loan proceeds in a refinance or out of your pocket in a purchase mortgage. The misleading advertising got you to call them.

Initially, this loan can be good if you are low on cash. Hey, it is not a bad loan in the short term. Let’s just say that the interest rate that they charge you increases your monthly payment $150 a month for a no cost mortgage. After 30 months, or 2.5 years you have paid $4,500 extra. What if that was the amount of your house closing costs when you first got the deal? Well, for the first 30 months you saved money and were better off. However, once you hit month 31, you are now paying more for your mortgage’s house closing costs than you would have if you had paid them up front when you got the mortgage.

Another thing to be careful about with this type of mortgage is that it is very easy for a mortgage company to charge you more than might have been able to charge you because their profit is made in the interest rate and in the slightly higher interest rates. With this said, it is hard to tell how much a mortgage company makes on your loan given your payment increases slightly over what you could have been paying if you had paid your own house closing costs.

So, the next time you hear of this kind of mortgage program, make sure you ask about the difference in your monthly payment between paying your own house closing costs, or for paying a higher interest rate. If you know you are only going to be in the home for a few years and then you are going to sell the home, then a no closing cost mortgage might good for you. If you are planning on staying longer and you know you are going to refinance in the near future, then this loan might be good for you too. But, if you do not want to refinance in the future, or be forced to have to refinance to get out of a no cost mortgage when it starts costing you money then the no cost mortgage probably is not right for you. Make sure you take a look at all your options. Do not let a slick mortgage person tell you that this loan saves you money – as this is not necessarily the case.

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Affordable House Closing Costs with an FHA Loan

Many people want to buy a home but between the down payment and the house closing costs many people just cannot afford to buy a home. It is something that has plagued the home loan industry for years, but when you have an FHA loan you will find that you can pay very little to get into your dream home. With a loan that is insured by the Federal Housing Administration you have several things on your side that make the process of getting into a new home more affordable. When you look into this type of loan you may find that you can spend as little as a month or two of rent to get into your new home, or less!

Step into Your New Home Affordably with an FHA Loan

With an FHA loan you will find that you don’t have to pay as much in house closing costs as you would if you were closing with a conventional loan. Why is this? It’s simple, actually. With an FHA loan there are restrictions and limits on what sort of costs can be added into the house closing costs. What this means is that the lender, the broker, and the realtor do not have carte blanch to charge you for anything and everything that they can think of so they can make more money off of your purchase. Instead, they have to keep things honest and legit and the restrictions and limitations ensure that you are only paying what you are obligated to pay, and nothing more. These limitations can help you reduce house closing costs from the tens of thousands of dollars to just two or three thousand dollars!

In addition to the limitations on house closing costs, the FHA also allows for the seller to contribute as much as six percent to the borrowers house closing costs. What this means is that if you are working with a seller who really wants to sell their home and they want to make it as quick and painless as possible, they can kick in some of their profits and help you pay for the house closing costs. So, if you had house closing costs of $6,500 and the seller wanted to contribute six percent of the costs on a $100,000 home they would be paying $6,000 of your house closing costs so you would only need to pay $500 in house closing costs. Many buyers will not contribute this much but they will offer four or four and a half percent or something like that.

What is different about this is that when you are working with a conventional loan the seller is limited to contributing 3% to the borrowers house closing costs. You would be surprised how many sellers are willing to contribute more than the 3% to the buyer when they are able because they just want to get the home sold and they want to be done with the whole process of selling their home. Being able to accept these contributions of more than 3% from the seller can help to make the purchase of a new home much more affordable for the average home buyer. The difference between the three and six percent is $3,000 and at the end of the day that is a lot of money when you are trying to keep the costs of your FHA loan to a minimum.

Closing On Your Home

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Reduce Your House Closing Costs

Many first-time home buyers are dismayed at the sudden appearance of house closing costs that seem to come from every conceivable avenue. They also can be beset by fees that seem to have no real explanation and cost them hundreds of dollars. Many people accept this as part of closing a real estate deal, but if you want to save as much money as possible, you will want to carefully evaluate each fee and find out which ones can be waived or eliminated.

Attitude and knowledge are your biggest weapons when dealing with lenders. Be polite at all times, but pretend that this is the 50th home you’re going to buy and you’re just doing it because you’re bored. You don’t need this home or this lender. You bought 10 homes last week. You just sold a dozen. Let the lender know by your attitude that you’re not so heavily invested in this home that you can’t walk away if your questions aren’t answered or your needs not met. Be prepared to do just that; many lenders have been used to buyers who will spend several thousand dollars more than they have to in order to buy a home. If you can find one lender, you can find another and it’s better to wait than to go with a lender who is not going to treat you properly.

There are a number of fees that can be reduced or completely waived for the savvy home buyer. Among them can hide “junk” or “garbage” fees, which are tacked on to the overall costs merely to make money for the lender. Things like “settlement fees” “underwriting fees” “messenger fees” are examples of fees that are soley there to provide profit for the lender. Learn the more common terms and ask for these fees to be waived.

Third party fees, such as appraisal, attorney fees, credit report, title insurance and title search are generally non-negotiable, as the lender has nothing to do with how much the third party charges. However, when searching for a lender, keep a record of how much is charged for each service and ask why if there is a drastic difference between one lender’s charge for a service and another’s.

Remember that you can walk away from your mortgage at any time. Even if it would cost you to do so, take this attitude in your dealings with your lender. If a fee is unexplained or too high, call them on it. You don’t have to be rude or hold it over their head like a guillotene, just don’t be so desperate to buy that you end up giving more money than you need to.

House Closing Costs

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House Closing Costs

When it comes time for you to purchase a new home or refinance the one you are living in, you cannot forget about the house closing costs.

Closing costs consist of no more than 5% of the total amount of the loan, so when you are sitting down to figure out your financial situation to get a grasp on what you can afford and what percentage you can put down, don’t forget to factor in the house closing costs.

The house closing costs you will pay are a one time fee that in no way can be avoided, so be prepared to pay them.

Closing costs consist of loan origination fees’, escrow fees’, home owner’s insurance, title insurance, property tax, property inspection, the appraisal fee, etc.

As you can see, you will be responsible for paying quite a pretty penny before you even step foot in your new home or even refinance your existing one.

For the sake of those refinancing, the house closing costs are usually taken out of the equity in the home. Of course the choice is yours and you are made well aware of this up front.

Closing costs are sometimes misunderstood by the consumer. It is important to understand that not all of the fee’s are being collected by the lender. Generally the application fee and the loan origination fee go to the lender while the other costs are distributed to the appropriate institutions.

Unfortunately for the consumer, nobody works for free. So there is no way of getting around these fees. So be prepared to factor the closing cost’s into the scenario while you are determining your spending power.

House Closing Costs

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FSBO Closing Costs


What Are Closing Costs?

When selling your home “For Sale by Owner” (aka FSBO), your lender usually prepares a “Good Faith Estimate” of house closing costs. You are entitled to receive this estimate no later than three business days after you apply for a loan. Because it is an estimate of the costs you may incur, it may not contain all potential costs. The lender will not know what all of the costs are going to be. The “Good Faith Estimate” will be an estimate based on previous experience. Actual closing expenses usually exceed the estimate. To avoid problems, go prepared to pay more than the amount listed on your estimate.

If you are comparing two lenders, look only at the costs charged by the lender. Lenders can only make educated guesses about the charges made by others.

You will receive an itemization of costs you may have to pay when you buy your home. The costs are listed in the order that they should appear on a Good Faith Estimate you obtain from a mortgage lender.

There are two broad categories of house closing costs. Non-recurring house closing costs are items that are paid once and you never pay again such as loan origination fees, recording fees, survey fees, etc. Recurring house closing costs are items you pay again over the course of home ownership, such as property taxes and homeowner’s insurance.

Closing costs are usually made up of the following:

1. Attorney’s or escrow fees (yours and your lender’s if applicable)

2. Property taxes (to cover tax period to date)

3. Interest (paid from date of closing to 30 days before first monthly payment)

4. Loan origination fee (covers lender’s administrative costs)

5. Recording fees

6. Survey fee

7. First premium of mortgage insurance (if applicable)

8. Title insurance (yours and your lender’s)

9. Loan discount points

10. First payment to escrow account for future real estate taxes and insurance

11. Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable)

12. Any documentation preparation fees.

On closing day, you’ll present your paid homeowner’s insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc.

Once you’re sure you understand all the documentation, you’ll sign the mortgage, agreeing that if you don’t make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You’ll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed.

You’ll pay the lender’s agent all house closing costs and, in turn, he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner.

At closing, you will get:

1. Settlement Statement

2. HUD-1 Form (itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing)

3. Truth-in-Lending Statement

4. Mortgage Note

5. Mortgage or Deed of Trust

6. Binding Sales Contract (prepared by the seller; your lawyer should review it)

7. Keys to your new home

Your Settlement Costs are going to consist of the following:

1. Sales/Broker’s Commission: This is the total dollar amount of the real estate broker’s sales commission, which is usually paid by the seller. This commission is typically a percentage of the selling price of the home.

2. Items Payable in Connection with Loan: These are the fees that lenders charge to process, approve and make the mortgage loan.

3. Loan Origination: This fee is usually known as a loan origination fee but sometimes is called a “point” or “points.” It covers the lender’s administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.

4. Loan Discount: Also often called “points” or “discount points,” a loan discount is a one-time charge imposed by the lender or broker to lower the rate at which the lender or broker would otherwise offer the loan to you. Each “point” is equal to one percent of the mortgage amount. For example, if a lender charges two points on a $80,000 loan this amounts to a charge of $1,600.

5. Appraisal Fee: This charge pays for an appraisal report made by an appraiser.

6. Credit Report Fee: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you.

7. Lender’s Inspection Fee: This charge covers inspections, often of newly constructed housing, made by employees of your lender or by an outside inspector.

8. Mortgage Insurance Application Fee: This fee covers the processing of an application for mortgage insurance.

9. Assumption Fee: This is a fee which is charged when a buyer “assumes” or takes over the duty to pay the seller’s existing mortgage loan.

10. Mortgage Broker Fee: Fees paid to mortgage brokers would be listed here. A CLO fee would also be listed here.

11. Interest: Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first monthly payment.

12. Mortgage Insurance Premium: The lender may require you to pay your first year’s mortgage insurance premium or a lump sum premium that covers the life of the loan, in advance, at the settlement.

13. Hazard Insurance Premium: Hazard insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders often require the borrower to bring to the settlement a paid-up first year’s policy or to pay for the first year’s premium at settlement.

14. Flood Insurance: If the lender requires flood insurance, it is usually listed here.

15. Title Charges: Title charges may cover a variety of services performed by title companies and others. Your particular settlement may not include all of the items below or may include others not listed.

16. Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. Responsibility for payment of this fee should be negotiated between the seller and the buyer.

17. Abstract of Title Search, Title Examination, Title Insurance Binder: The charges on these lines cover the costs of the title search and examination.

18. Document Preparation: This is a separate fee that some lenders or title companies charge to cover their costs of preparation of final legal papers, such as a mortgage, deed of trust, note or deed.

19. Notary Fee: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them.

20. Attorney’s Fees: You may be required to pay for legal services provided to the lender, such as an examination of the title binder. Occasionally, the seller will agree in the agreement of sale to pay part of this fee. The cost of your attorney and/or the seller’s attorney may also appear here. If an attorney’s involvement is required by the lender.

21. Title Insurance: The total cost of owner’s and lender’s title insurance is shown here.

22

. Lender’s Title Insurance: The cost of the lender’s policy is shown here.

23. Government Recording and Transfer Charges: These fees may be paid by you or by the seller, depending upon your agreement of sale with the seller. The buyer usually pays the fees for legally recording the new deed and mortgage (line 1201). Transfer taxes, which in some localities are collected whenever property changes hands or a mortgage loan is made, can be quite large and are set by state and/or local governments. City, county and/or state tax stamps may have to be purchased as well

24. Survey: The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays the surveyor’s fee, but sometimes this may be paid by the seller.

25. Pest and Other Inspections: This fee is to cover inspections for termites or other pest infestation of your home.

26. Lead-Based Paint Inspections: This fee is to cover inspections or evaluations for lead-based paint hazard risk assessments.

27. Total Settlement Charges: The sum of all fees in the borrower’s column entitled “Paid from Borrower’s Funds at Settlement” is placed here. This figure is then transferred to line 103 of Section J, “Settlement charges to borrower” in the Summary of Borrower’s Transaction on page 1 of the HUD-1 Settlement Statement and added to the purchase price. The sum of all of the settlement fees paid by the seller are transferred to line 502 of Section K, Summary of Seller’s Transaction on page 1 of the HUD-1 Settlement Statement.

Don’t be overwhelmed by all of the fees and charges. Your closing agent will go over each item one line at a time.

house closing costs

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