|
|
escrow and closing costs |
|
|
|
| Q: |
How can I save on closing costs? |
| A: |
Studies show that the
closing costs, which can average 2 to 3 percent of a total home purchase
price, are often more costly than many buyers expect. But there are some
ways to save:
* Negotiate with the seller to pay all or part of the closing costs. The
lender must agree to this as well as the seller.
* Get a no-point loan. The trade-off is a higher interest rate on the
loan and many of these loans have prepayment penalties. But buyers who
are short on cash and can qualify for a higher interest rate may find a
no-point loan will significantly cut their closing costs.
* Get a no-fee loan. Usually, though, these fees are wrapped into a
higher interest rate though it will save you on the amount of cash you
need upfront. * Get seller financing. This kind of arrangement usually
does not entail traditional loan fees or charges.
* Rent the property in which you are interested with an option to buy.
That will give you more time to save for the upfront cash needed for the
actual purchase.
* Shop around for the best loan deal. Each direct lender and each
mortgage brokerage has their own fee structure. Call around before
submitting your final loan application. |
|
| Q: |
Where do I get information about
closing costs? |
| A: |
For more on closing
costs, ask for the "Consumer's Guide to Mortgage Settlement
Costs," Federal Reserve Bank of San Francisco, Public Information
Department, P.O. Box 7702, San Francisco, CA 94120 or call (415)
974-2163. |
|
| Q: |
What are closing costs? |
| A: |
Closing costs are the
fees for services, taxes or special interest charges that surround the
purchase of a home. They include upfront loan points, title insurance,
escrow or closing day charges, document fees, prepaid interest and
property taxes. Unless, these charges are rolled into the loan, they
must be paid when the home is closed. |
|
| Q: |
Who pays the closing costs? |
| A: |
Closing costs are
either paid by the home seller or home buyer. It often depends on local
custom and what the buyer or seller negotiates. |
|
| Q: |
Why do I need a title report? |
| A: |
As much as you as a
buyer may want to believe that the home you have found is perfect, a
clear title report ensures there are no liens placed against the prior
owners or any documents that will restrict your use of the property.
A preliminary title report provides you with an
opportunity to review any impediment that would prevent clear title from
passing to you.
When reading a preliminary report, it is important to
check the extent of your ownership rights or interest. The most common
form of interest is "fee simple" or "fee," which is
the highest type of interest an owner can have in land.
Liens, restrictions and interests of others excluded
from title coverage will be listed numerically as exceptions in the
report.
You also may have to consider interests of any third
parties, such as easements granted by prior owners that limit use of the
property. Some buyers attempt to clear these unwanted items prior to
purchase.
A list of standard exceptions and exclusions not
covered by the title insurance policy may be attached. This section
includes items the buyer may want to investigate further, such as any
laws governing building and zoning.
|
|
Copyright 1999 Inman News Features
|
|
|
|
|
