You’ll likely be
responsible for a variety of fees and expenses that you
and the seller will have to pay at the time of closing.
Your lender must provide a good-faith estimate of all
settlement costs. The title company or other entity
conducting the closing will tell you the required amount
for:
·
Down payment
·
Loan origination
·
Points, or loan
discount fees, which you pay to receive a lower interest
rate
·
Home inspection
·
Appraisal
·
Credit report
·
Private mortgage
insurance premium
·
Insurance escrow
for homeowner’s 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
·
Title insurance
policy premiums
·
Land survey
·
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 five 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.
