October
2007
Understanding Closing the Sale from the Buyer’s Perspective0
The time has come. You have signed all the documents required by your escrow officer. The escrow has been funded by your lender. You have deposited your our down payment into escrow. Today is closing day! Today you will own the home or real estate. It’s also the day that you and the seller will pay closing costs which are all the charges to close this transaction.
As a Buyer, what closing costs do I pay?
The seller pays for the real estate commissions. You pay for appraisal fees for your loan, loan fees, usually one half of the escrow charges, advance payments for property taxes, homeowner’s insurance, title insurance premiums for your lender and a few other charges like document fees and postage.
How much will I be paying for all this?
The amount you pay for to close varies with the purchase price. If you are taking out a new loan, an estimate of your costs will be in the settlement estimate provided to you (required under the Real Estate Settlement Procedures Act). This disclosure provides you with a good faith estimate and an itemized list of charges to close your transaction and take title.
Must I pay for closing costs all at once?
They must be paid at closing in the escrow in full since the escrow agent has to pay those parties at that time.
Can I use a personal check for the down payment or closing costs?
Typically buyer’s either wire the funds or use a cashier’s check. Using a personal check may delay the closing because your escrow officer will have to wait for it to clear. .
Am I required to have title insurance to buy a home?
All lenders will require it. If you pay cash for a property, you usually can get the seller to pay for it. You are not required by law to have title insurance but it sure it a good idea.
How much is title insurance?
There is a lot of confusion about this. Typically the seller pays for his/her portion of the policy and you pay for your lender’s title insurance. The seller’s portion is usually larger. Your escrow officer will provide you with an estimate but you can ask for quotes from several title insurance companies. Often the seller will try to dictate which company is used since he/she is paying for most of it.
Why does the lender need title insurance?
Because the lender needs to know the title is clean. Most lenders sell the loan and the buyer of the loan will never see the property so the insurance helps them know they have a valid and enforceable lien. Without a current title policy the original lender will not have a marketable loan.
What does my title dollar pay for?
Title insurance companies attempt to eliminate the risk of future title claims or conflicts by research during an intensive period of risk identification.
These companies spend a significant percentage of their operating revenue collecting, storing, maintaining and analyzing and disseminating official public records that may affect title to real property. This work is very labor-intensive and methodical. Their “title plant” is a specialized library of records that can go back in time hundreds of years. Also keep in mind that every day this information changes with each new recording, lien, lawsuit etc. These recorded documents affect real property and must be organized for rapid and accurate retrieval so a title can be updated in a short period of time.
Title experts must be able to identify the rights others may have in your property. This includes but is not limited to: recorded liens, disputes, lis pendes, legal actions, rights of ways or easements, or many other potential encumbrances of title. It have recently been involved in a transaction were there were 48 “Schebule B†items, which means there were 48 problems standing in the way of getting clear title so the transaction woud close. What a nightmare that was… But we got it done!