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What
are Closing Costs?
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| Essentially,
closing costs are the costs involved with transferring title of the
property, establishing value in the property (appraisal), and getting
the financing. These are the settlement or closing costs. |
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| Establishing
and Transferring Ownership |
| This
includes a title search, title insurance and related escrow/attorney's
fees. An investor requires clear title before lending monies on property.
Clear title is proven with a title search.
Public
records affecting real estate title are in local government offices,
county courts, tax offices, and surveys. Records of deaths, divorces,
court judgments, liens, and contests over wills are all examined
in case they adversely affect title. The title search is done by
an escrow or title company, a lawyer, or title examiner. In addition
to the title search, your lender will require a title insurance
policy. The policy protects the lender against an error by the title
examiner.
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| Amounts
Paid to State and Local Governments |
| City,
county and state transfer taxes, recording fees, and prepaid property
taxes |
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| Costs
of Getting a Mortgage |
| Appraisal,
credit report, loan documentation fees, notary charges, loan origination,
underwriting, commitment and processing fees, hazard insurance, interest
prepayments, and lender's inspection fees. |
Processing
Fee
paid to the processer |
This
charge covers the initial costs of processing your loan request. |
Appraisal
Fee
paid to the appraiser |
Pays
for an independent appraisal of the home you want to finance. It establishes
the market value of the house for the loan. |
Origination
Fees
My Fee. 1% for owner occupied properties; 1.5% for investor properties.
& Discount Points
paid to the lender |
The
origination fee is charged for evaluating and preparing your loan.
Discount points are prepaid finance charges paid to the lender to
increase the yield beyond the stated interest rate on the mortgage
note. More discount points paid equals a lower interest rate. One
point equals one percent of the loan amount. For example, one point
on a $100,000 loan would be $1,000. In some cases - mostly refinances
- points can be financed by adding them to the loan. |
Insurance
-
Homeowners |
Your
lender will insist you have a policy to protect them against damage
to the house in effect at closing. |
| Assumption
Fee, if any |
This
is charged on assuming an existing mortgage. The size of the fee will
depend entirely on the lender, be sure to ask the seller what it is.
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| Home
Inspection Fee, paid to the home inspector |
This
is an option for buyers who want an analysis of the structural condition
of the property by an engineer or consultant. |
| Mortgage
Insurance, paid to a title insurance company |
Buyers
who have mortgages of more than 80% of the value of the house may
be required to take mortgage insurance. This policy covers the lender's
risk in the event the buyer fails to make the loan payments. Premiums
are paid annually from an escrow or reserve account, or in a lump
sum at closing. |
Expenses
Between
Buyer & Seller |
Typically,
a seller pays the pro-rated portion of local property taxes, annual
condominium fees and other like charges, and the buyer assumes the
remainder of the year's fees. |
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| Anticipating
Closing Costs |
It
is paramount that you know what to expect. The lender is required
to supply you with a Good Faith Estimate of all your closing costs
within three business days of your application for a loan. Under
the Truth in Lending Act the lender is also required to provide you
with a disclosure estimating the costs of the loan you have applied
for, including your total finance charge and the Annual Percentage
Rate (APR). The APR expresses the cost of your loan as a yearly rate,
but this rate is going to be higher than the stated interest rate
on your mortgage because it calculates discount points, mortgage insurance,
and other fees that add to the cost of your loan. Finally, a settlement
statement of your actual costs will be given to you at or before closing.
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Could
it get any easier?
Call Traci, 770)428-1392
or send an email
and we'll call you
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You'll
find these fees are paid to everyone from your lender to the state of
Georgia. They are simply the cost of buying real property.
My
fee is the loan origination fee:
1% for owner occupied properaties;
1.5 % for investor properties.
Some
lenders advertise no fees. Don't kid yourself. We aren't a charity, this
is what we do for a living. Someone has to pay the fees involved in transferring
real property, and if the lender can afford to do so, it is because there
is sufficient profit in the loan.
But
the bottom line is YOU pay the costs
either at the closing table on the settlement
statement, or for the life of your loan in interest rate.
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