Closing Costs

When buying a home, the subject of closing costs inevitably crops up. There are three basic categories of charges and fees in settling and closing the home buying transaction:

· Charges for establishing and transferring ownership such as title search, title insurance, legal fees and fees for conducting the settlement.
· Amounts paid to state and local governments. This includes city, county and state taxes, recording fees and prepaid property taxes.
· Costs of getting a mortgage, including appraisals, credit checks, notary charges, loan origination fees, commitment and processing fees, interest prepayments and lender inspection fees.

Title Search

When you buy or sell a car, it’s pretty easy to establish ownership. Houses are much more complex and providing a clear title isn’t always so simple. For starters, the lender will not give you a loan unless you can prove that the seller owns it. The only way to do this is to conduct a title search.

A title search reviews all the public records related to the property, including death records, divorces, court judgments, liens and contests over wills. Each of these can affect the ownership rights of the property.

Title Insurance

In most cases your lender will require a title insurance policy. This protects the lender against any errors missed in a title search. The cost of this policy is usually based on the loan amount and is most often paid by the homebuyer. There is nothing to keep you from asking the seller, during your negotiations, to pay part or all of this premium. This policy only protects the lender, not you. If you want to protect yourself from unforeseen title problems, you may want to take out an owner’s title insurance policy.

Government Costs

In some parts of the country, the transfer, recording fees and property taxes collected by local and state governments may be the heftiest charges you will pay in the closing costs.

Mortgage Calculator l The Lowdown on Down Payments l A word about Credit Histories l Other Considerations l Mortgage Related Closing Costs

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