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How can I save on closing costs?
ANSWER: 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:
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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.
What are closing costs?
ANSWER: 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.
Where do I get information about closing costs?
ANSWER: For more on
closing costs, ask for the "Consumers Guide to Mortgage
Settlement Costs," Federal Citizen Information Center,
Pueblo, CO 81009; (888) 878-3256; pueblo.gsa.gov.
Who pays the closing costs?
ANSWER: 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.
Why do I need a title report?
ANSWER: 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.
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