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Closing
Day
The day you go to the title or escrow company, sign your name on the
dotted line, hand over a check and prepare to take ownership of your new
home.
It's also the day that you and the seller will pay "closing" or
settlement costs, an accumulation of separate charges paid to different
entities for the professional services associated with the buying and
selling of real property.
What Services will You be Paying for When You Pay Closing Costs?
You will usually be paying for such things as real estate commissions,
appraisal fees, loan fees, escrow charges, advance payments such as
property taxes and homeowner's insurance, title insurance premiums, pest
inspections and the like.
How Much Should You Expect to Pay in Closing Costs?
The amount you pay for closing costs will vary; however, when buying
your home and obtaining a new loan, an estimate of your closing costs
will be provided to you pursuant to the Real Estate Settlement
Procedures Act after you submit your loan application. This disclosure
provides you with a good faith estimate of what your closing costs will
be in the real estate process. An itemized list of charges will be
prepared when you close your transaction and take title to your new
property.
Can You pay for Your Closing Costs in Installments?
No, and it is easy to understand why. Many different parties will have
fulfilled their responsibilities and be awaiting payment upon closing.
The title or escrow company will disburse money to those parties,
pursuant to the escrow instructions, when funds are available.
Will You be Allowed to Write a Personal Check to Cover Your Closing
Cost?
Your closing funds should be in the form of a cashier's check, issued by
an institution from the state of your purchase, made payable to the
title company or escrow office in the amount requested. A personal check
may delay the closing or may be unacceptable to the title or escrow
company. An out-of-state check could also cause a delay in your closing
due to possible delays in clearing the check.
How Much Can You Expect to Pay for Title Insurance?
This point is often misunderstood. Although the title company or escrow
office usually serves as a meeting ground for closing the sale, only a
small percentage of total closing fees are actually for title insurance
protection.
Your title insurance premium may actually amount to less than one
percent of the purchase price of your home, and less than ten percent of
your total closing costs. The title policy is good for as long as you
and your heirs own the property with the payment of only one premium.
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