Home Loan Closing Costs Explained

Home Loan Closing Costs Explained

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When purchasing a home there are many fees and costs associated with the transaction. Common costs are title insurance, escrow fees, lender fees, inspections, appraisal, and pre-paid costs such as taxes, insurance, and HOA. Closing costs and fees may be financed into the loan or paid upfront.

Lender and origination fees are a lender’s cost to complete your home loan financing. These fees cover costs associated with processing, underwriting, and funding your new loan. If there is a cost listed for discount points, this is an extra fee being charged for a lower interest rate.

The Escrow Company will charge a fee for their services. In the purchase contract, it will state who the escrow and title company will be and what portion of the fee is to be paid for by the buyer and seller.

Keep in mind that there will be other miscellaneous fees associated with purchasing a home such as home inspection, appraisal, pest inspection, credit report, document recording, and possibly Condo and Homeowner’s Association (HOA) review.

Before getting into the home buying process, it is important to understand what fees you may be faced with and how to pay for them. Open communication with your agent and lender is the first step to ensure you understand the costs of home ownership.

Pre-paid costs are required home ownership costs that are paid upfront instead of in the future. These may be higher or lower depending on whether you will have an impound account or not. Pre-paid costs may include loan interest, homeowner’s insurance, property taxes, and homeowner’s association dues.

To learn more, make sure to watch all of our home buying academy videos. For any questions about home buying or home financing, you may contact us through our website rwmloans.com or call us at 858-794-2155. We have loan officers and real estate agents available to help you start the process.

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Huntsville Alabama Real Estate | What’s the Return On Home Fix Up Costs

Huntsville Alabama Real Estate | What's the Return On Home Fix Up Costs

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Thinking about updating your kitchen or master bath. Before you start knocking down walls you should calculate your return on investment. Will the money you invest in home fix up come back to you when it’s time to sell?

Tim Knox Revolved Realty: Huntsville Alabama

Whats the Difference Between Closing Costs & Prepaid Items in Birmingham AL?

Whats the Difference Between Closing Costs & Prepaid Items in Birmingham AL?

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Collier Swecker video blogs about the difference in closing costs and prepaid items which are terms that you will encounter at closing when buying a home in the Birmingham AL area. Birmingham home buyers need to make sure that when drafting a sales contract, and they are asking a seller to pay for a particular amount of their closing costs they need to include prepaid items be paid by seller, as well. This will ensure that you can actually get the seller to pay all of your costs related to the purchase of the home, up to the negotiated amount that the seller has to pay.

Technically, prepaid items are part of a buyers overall closings costs but are interpreted by many closing attorneys and Realtors as different because specifically, prepaid items are recurring costs that a buyers will incur year after year. Examples of prepaid items are, PMI, Prepaid Interest, Property Taxes, and Home Owners Insurance.

I have seen situations where only the term closing costs was written into the contract and the buyer left money on the table that otherwise would have reduced the money that the Buyer needed to bring to closing. For example, a buyer and seller agree that a seller is to pay $3000 in buyers closing costs. Further suppose that all of the buyers closing costs (except recurring prepaid items) total $2500 and the total of pre-paid items is $500. Because the contract did not state seller to pay $3000 towards buyers closing costs AND prepaid items (just closing costs) the buyer can only receive credit from the seller of $2500 at closing and he leaves $500 that otherwise would have been contributed by the seller. He now has to bring $500 to closing that he otherwise would not have had to bring.

Make sure that you and your Birmingham Realtor are as detailed as possible when drafting your sales contract so that you do not leave any money on the table! If you have questions about closing costs or have comments about this post, I welcome your comments.

Mega Agent Real Estate Team at Remax Advantage