Closing costs, sometimes called settlement costs, consist of all the expenses associated with transferring title to real estate, recording deeds and other documents, dividing ongoing income and expenses fairly between buyer and seller, complying with government paperwork, and all the other services regarding the protection of buyers and lenders in the transaction. Although they are not technically closing costs, many lenders have fees and expenses that must be paid in advance before they will even consider your loan request. Also, bear in mind that certain items of due diligence - making sure the property is suitable for your needs - will have their own associated expenses.
Each transaction requires a new title insurance policy. You can, however, often obtain a discount called a reissue credit. Some companies will give the credit only if they wrote the prior policy. Some will recognize competitors' title policies and give you the discount, but you will need to give them a copy of the earlier policy. Usually there is a five-year time limit - anything older than that will not qualify for a discount.
Often, a surveyor will charge a small fee to update a survey previously prepared by him or her. Surveys prepared by others do not normally enjoy the same courtesy. Appraisals are always prepared fresh, for each transaction, as are any required engineering reports.
There is no rule regarding who pays which closing costs. This is absolutely a matter of negotiation between buyer and seller. It is not uncommon for one or the other to pay all the closing costs. It depends on who is the more motivated person, and who is the better negotiator. Typically, the seller will pay for the owner's title policy, deed preparation, and transfer taxes. The buyer will pay for all loanrelated fees and recording fees. The parties will split the closing company fees. There is nothing sacred about this custom, however.
If a real estate agent is involved in the transaction, he or she can usually give you an estimate of the closing costs except for those related to your loan. In many states, real estate agents are required to give that information to their clients and customers. For consumer loans, the lender is required to give you an estimate of the closing expenses. This is not a requirement for business loans, but you can still ask for and receive the same information. Any title insurance company can give you a quote for owners' and for lenders' basic title insurance. They will need to know the purchase price and the amount of the mortgage loan. Remember, though, this will not include extra endorsements requested by your particular lender. The local office where deeds and mortgages are recorded can tell you how to calculate recording fees and transfer taxes. These are usually a percentage of the dollar amount of the transaction.
Our website is not responsible for the information contained by this article. Webworldarticles.com is a free articles resource thus practically any visitor can submit an article. However if you notice any copyrighted material, please contact us and we will remove the article(s) in discussion right away.
This article was sent to us by:
Jack E. Rogers at
07042010
1. Start Investing Money in Real Estate
All articles in this directory are property of their respective authors. Additionally, read our Privacy Policy
© 2010 WebWorldarticles.com - All Rights Reserved.