Low Mortgage Rates for Smart Loan Shoppers
|
|
Low Mortgage Rates for Smart Loan Shoppers |
Understanding Closing Costsby Karen LawsonCMR Columnist Your offer on a new home has been accepted, and you've received a "good faith" estimate of closing costs. What are closing costs, and can they be negotiated? Closing costs are the fees and costs charged by your mortgage lender and the company handling the closing. Closing costs may also include incidental costs such as payment of property taxes and prorated interest. What Are Closing Costs, and Who Pays Them?The lender that's making your new home loan charges fees and costs for processing your loan. Lender fees can include application and processing fees, as well as credit reporting fees. Additional fees for documents and copying, points to be paid (a point is 1 percent of the amount of your mortgage loan). Appraisal, home inspection, and home warranty fees may also be charged.The company handling your escrow (the period between acceptance of your offer and the closing date) will also charge a fee, which is called an escrow fee. What about Recording Fees and Taxes?Various jurisdictions, including your city, county, and state, may charge recording fees and taxes associated with the purchase of your home. Property taxes will be prorated during the time your property is in escrow, but will probably be paid by the seller.Title Insurance and Escrow FeesYou will also be charged for a title insurance policy and an escrow (or closing) fee. Title insurance verifies that title to your property is clear, except for your mortgage and ongoing assessments such as property taxes. The company handling your escrow (frequently the same company that issues the title insurance policy) will also charge a fee for handling the escrow and closing the purchase transaction.Review Closing Costs CarefullyIt's important to review your settlement statement to determine what you're expected to pay for. Don't be afraid to ask questions. Your lender and escrow officer can explain the itemized charges appearing on your settlement statement.About the Author Karen Lawson has more than fifteen years of experience in mortgage banking. She earned an MA degree in English from the University of Nevada, Reno. © 2006 CMR. All rights reserved. |