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Question:
How can I save on closing
costs?
Answer:
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.
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Question:
What are closing costs?
Answer:
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.
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Question:
Where do I get
information about closing costs?
Answer:
For more on closing
costs, ask for the "Consumers Guide to Mortgage
Settlement Costs," Federal Citizen Information Center,
Pueblo, CO 81009; (888) 878-3256; pueblo.gsa.gov.
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Question:
Who pays the closing
costs?
Answer:
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.
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Question:
Why do I need a title
report?
Answer:
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.
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