Things your mom never told you: closing costs
Buying or selling a home can be one of the most life-changing decisions for a consumer. Being informed about the real estate process and researching things you don’t understand is essential. Working with trustworthy and communicative real estate professionals is important. There is a lot of money at stake when buying or selling a home, so be sure to ask questions when you need to about charges, fees, or other issues.
You have to have faith!
Three days after an initial application is submitted, the lender must provide a Good Faith Estimate of Settlement Costs (GFE). The GFE is a list of closing charges, and the HUD settlement statement you receive at closing is confirmation of these charges. Review GFE costs carefully and question anything you don’t understand. When you receive your statement from HUD, the charges and fees should be familiar to you and reflect the GFE. There should be no surprises in closing costs. If the GFE and HUD costs do not match, these issues need to be addressed immediately. Discuss cost discrepancies with your REALTOR and a representative of the lender. Any costs that are not disclosed in the GFE can be argued against and removed from HUD.
Closing costs 101
The first page of a HUD shows the buyer what matters most, the exact amount owed at closing. The fees associated with a loan are divided into sections. Lender costs include origination fees, discounts, appraisal, credit reporting, underwriting, and processing. Title and closing costs cover third-party closing agent and title search, insurance, and registration fees. Taxes and fees associated with the deed will be listed. The buyer can also create an escrow account with prepaid funds for the lender to make tax and insurance payments on time each month. The REALTOR’s commission will also appear on the list, along with the survey fees, if necessary.
Seller’s financial responsibilities
At closing, the seller also has financial responsibilities. The seller pays taxes and attorney’s fees, title and commission. If necessary, the seller is responsible for outstanding Homeowners Association fees, termite and moisture inspection charges, and well water and septic tests. Repairs to be made to the property will be deducted from the seller’s income. Links owed by the seller must also be paid, including fiscal links. The seller must insure the home until the deed to the property is recorded a few days after closing. The buyer must have the insurance activated on the closing date.
Invest and save money
Most home buyers know that a down payment helps save money by reducing the amount of the loan and mortgage insurance. This reduces the monthly payments. It also qualifies you for better-rate mortgage programs. Another savings tip is to pay your closing costs upfront with your down payment. Avoid shifting closing costs onto the loan itself or the loan and interest will go up. With no funds to cover your down payment and closing costs, you’ll want to refinance later. Another important investment for home buyers is working with a mortgage broker. A mortgage broker will look for the best loan and the best interest rate. The knowledge a mortgage broker has can equate to savings of up to $ 50,000 in interest charges. If you have credit problems or just want inside information, a mortgage broker is your best option.
Complete the transaction
The closing is an exciting day for both buyer and seller. The buyer should bring the GFE for reference during the meeting and request to review the HUD 24 hours in advance. This means that you are prepared and comfortable with the completion of the real estate purchase. A third party closing agent and the REALTOR will be present. The loan officer or mortgage broker may also be present to answer any questions regarding the loan. Some companies, like Breakwater Mortgage in Virginia, require their brokers to attend. It is better to work with companies like this, as they are willing to participate more. Now that all questions have been answered and the sale is complete, you can look forward to your new home and focus on the future!