Common Closing Costs for Buyers
Pro-rations ~ Appraisal fees ~ Discount Points ~ Oh My!
It is really important to know! How much is it going to cost to buy a home? Not the monthly payment, you probably already have a good idea of what that will be. What you need to be sure of is how much CASH will you need to close. What are closing costs? Which of these are included in your loan, and if they are not, when do I pay and how much? Great questions! Your lender must disclose a good faith estimate of all settlement costs, but this is not a complete list. You will also have title & escrow fees and possibly a home warranty payment or commissions due. A check to cover your closing costs will probably have to be a cashier's check. In Arizona, the title company conducting your closing will gather all the required information and be able to tell you the total needed to close on your home purchase. They will generate a HUD statement for your review prior to closing which outlines all the fees. These may include:
- Down payment.
- Loan origination fees.
- Points, or loan discount fees you pay to receive a lower interest rate.
- Appraisal fee.
- Credit report.
- Private mortgage insurance premium.
- Insurance escrow for homeowners insurance, if being paid as part of the mortgage.
- Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
- Deed recording fees.
- Title insurance policy premiums.
- Inspection fees, building inspection, termites, etc.
- Notary fees.
- Pro-rations for your share of HOA dues and property taxes.*
*A Note About Pro-rations. Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Pro-ration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the HOA usually sends a bill each month for the previous month. But assume you buy the home on the 6th of the month. You would owe the HOA for only the days from the 6th to the end for the month. The seller would owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.
1st Heritage Realty
5501 N Swan Rd Tucson AZ 85718
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