Closing On Your Home
Closing is the last step to actual ownership of your new home. Even though you have a signed purchase agreement and your loan request has been approved, you have no legal rights to the property, including access, until legal title to the property is transferred to you and the loan is closed. At closing, you will sign the mortgage loan documents and pay your closing costs, the seller will execute the deed to the property, and the closing agent will record the necessary instruments to give you legal ownership of the property.
Final Walk Through
About 24 hours prior to your closing, you and your real estate agent should take one last look at the house you are buying to ensure the seller is delivering the property to you as agreed. For instance, if the seller has agreed to deliver the property vacant and in broom clean condition, the house should be empty and clean. If the seller has agreed to make certain repairs, you should make sure those repairs have been completed. If the seller has promised to convey all appliances, make sure all the appliances are there. The same goes for any light fixtures, window treatments, etc.
Closing costs are also known as settlement costs. These costs are the expenses over and above the price of the property that buyers and sellers normally incur to complete the real estate transaction. Closing costs are separated into two categories: nonrecurring closing costs and prepaid costs.
Nonrecurring costs are one time costs associated with buying a property or obtaining a loan. Prepaid costs are those that recur over time, such as property taxes and homeowners' insurance. These costs are estimated by the lender on what is called a "goodfaith estimate," which the lender must issue to the borrower within three days of a home loan application.
Closing costs often include things such as:
∙ A fee for running your credit report.
∙ A loan origination fee, which lenders charge for processing the loan paperwork.
∙ Attorney's fees.
∙ Charges for any required/requested inspections by the lender or you.
∙ Discount points, which are fees you pay in exchange for a lower interest rate.
∙ Appraisal fee.
∙ Survey fee, which covers the cost of verifying property lines.
∙ Title Insurance, which protects the lender in case the title isn't clean.
∙ Title search fees, which pays for a background check on the title to make sure there aren't things such as unpaid mortgages or tax liens on the property.
∙ Escrow deposit, which may pay for a couple of months' property taxes and private mortgage insurance.
∙ Pest inspection fee.
∙ Recording fee, which is paid to a city or county in exchange for recording the new land records.
∙ Underwriting fee, which covers the cost of evaluating a mortgage loan application.
∙ Flood certification fee, to determine if your property lies in a flood zone that requires flood certification insurance.