The lender must disclose a good faith
estimate of all settlement costs. A check to cover your
closing costs will probably have to be a cashier's check. The
title company or other entity conducting the closing will tell
you the required amount for:
- Downpayment.
- Loan
origination fees.
- Points,
or loan discount fees you pay to receive a lower interest
rate.
- Appraisal fee.
- Credit
report.
- Private
mortgage insurance premium.
- Insurance escrow for homeowners
insurance, if being paid as part of the mortgage.
- Property tax
escrow, if being paid as part of the mortgage. Lenders keep
funds for taxes and insurance in escrow accounts as they are
paid with the mortgage, then pay the insurance or taxes for
you.
- Deed
recording fees.
- Title
insurance policy premiums.
- Survey.
- Inspection fees—building inspection,
termites, etc.
- Notary
fees.
- Prorations
for your share of costs such as utility bills and property
taxes.
A
Note About Prorations.
Because such costs are usually paid on either a monthly or
yearly basis, you might have to pay a bill for services used
by the sellers before they moved. Proration is a way for the
sellers to pay you back or for you to pay them for bills they
may have paid in advance. For example, the gas company usually
sends a bill each month for the gas used during the previous
month. But assume you buy the home on the 6th of the month.
You would owe the gas company for only the days from the 6th
to the end for the month. The seller would owe for the first 5
days. The bill would be prorated for the number of days in the
month, and then each person would be responsible for the days
of his or her ownership.
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