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 Citizen Information
Center, Pueblo, CO 81009; (888) 878-3256;
pueblo.gsa.gov.
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.
