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What You’ll Learn
Who will be present on closing day
What documents are in a closing package
Why it’s important to understand your closing documents
The day has arrived. You’ve submitted all your financial documents and received a “clear to close.” Now, you may be wondering what else happens before your new home loan or refinance is official. At the closing table, the amount of paperwork you have to review and sign might seem overwhelming, but as with most steps of the homeownership journey, knowing what to expect can put your mind at ease.
Let’s take a look at the documents you’ll be reviewing in your closing package and what the closing process looks like.
Who will be present at closing?
Before we get into what’s in your closing package, we’ll review the key players at the closing table.
If you’re purchasing a home, closing usually involves:
- The buyers/borrowers (you and any co-borrowers who are also listed on the mortgage)
- The sellers
- Your real estate agent
- The seller’s agent
- A settlement agent who will facilitate the paperwork (this person may be an escrow or title company officer, attorney, real estate agent, mortgage broker, or homebuilder)
- Your real estate attorney, if you have one (not required in all states)
If you are closing on a refinance, you will likely have a smaller crew, including:
- The borrowers (you and any co-borrowers who are also listed on the mortgage)
- A title agent or notary who will provide and observe the signing of the paperwork (nearly all Better Mortgage refinances are facilitated by a mobile notary for your convenience)
When all necessary parties are present, you will have the green light to sign and initial your way through the closing package.
What is a closing package?
A closing package is a collection of documents that you’re required to sign on closing day to finalize your home purchase or refinance. It includes title, homeownership, and mortgage documents. After you sign on each dotted line, you'll be legally obligated to meet the terms in these contracts, so don’t be afraid to ask questions about anything that seems unclear.
The exact documents in your closing package will vary based on where you live and what kind of property you’re buying or refinancing. But let’s go through some of the most common closing documents you’re likely to encounter.
Final closing disclosure
A closing disclosure, formally known as a “Final Truth-in-Lending Disclosure,” is designed to ensure you understand the terms of your home loan. Your lender is required to provide the initial closing disclosure 3 days before closing, allowing you time to review and check for errors. Be sure to read it over carefully so that you can ask questions about your cibo matto caffe mansfield ma closing figures.
The closing disclosure lays out all the details of your home loan, including the principal loan amount, interest rate, and your total monthly payment. This document also includes information about your closing costs and how much money you’ll need to bring to the closing table.
A promissory note, sometimes simply referred to as “the note,” is a document you sign to indicate that you promise to repay your mortgage. It outlines information about your home loan, including the amount you owe, any relevant repayment dates, and the total length of time for repayment. This document also explains what will happen if you decide to stop paying or are unable to pay your mortgage.
If any information in your promissory note is different from what you've discussed with your lender, contact them right away to get clarification and/or make necessary changes.
Mortgage or security instrument, aka the deed of trust
In exchange for lending you money to purchase the property, the deed of trust is the lender’s guarantee you will pay off the loan as agreed. It reiterates the loan information outlined in both the closing disclosure and the promissory note. However, it also details the rights and responsibilities of the borrower and lender.
For the borrower, the deed of trust secures equitable title, which means you have the right to live at the property, make improvements, resell it, and benefit from any equity gained in the property through repayment of the loan or increased value.
The deed of trust also outlines the lender’s rights in the case of default. For instance, most mortgages contain an acceleration clause. The acceleration clause states that if you are unable to abide by the terms of the loan, such as keeping an up-to-date homeowners insurance policy, the lender has the right to declare your loan in default and request payment in full. If you are unable to pay the loan off in full at that time, the lender has the right to start foreclosure proceedings.
Initial escrow disclosure
The initial escrow disclosure provides you with information about the specific charges you will be responsible for paying into escrow each month according to your mortgage agreement. These costs may include homeowners insurance premiums and property taxes. If you’re required or have elected to let your lender manage your escrow payments, this disclosure will tell you how much of your monthly mortgage payment goes toward these amounts.
Each month, these amounts will be collected in a separate, independently managed account, known as an escrow account, so there's enough to pay your homeowners insurance provider and your taxes. Keep in mind that the lender may use escrow for other charges or premiums, such as private mortgage insurance (PMI).
Usually, the first time you see this document will be at closing. Lenders are only required to provide it within the first 45 days of establishing an escrow account for you, and it’s likely that whoever services your loan will provide it. After the initial escrow disclosure statement, they must also send you an escrow account statement on an annual basis.
Mortgage servicing disclosure
The mortgage servicing disclosure lets you know that your lender has the right to sell your loan to another loan servicer. The loan servicer is who you make mortgage payments to each month. If your lender will not be servicing your loan, this document will outline pertinent information about the transfer and what to do should any issues arise.
Even if your mortgage servicer does change, nothing else about your mortgage will be adjusted—only where you send the payments.
Right to cancel form
If you are refinancing an existing home loan, you will also find a right to cancel form in your closing package. As the name indicates, this form allows up to three days to cancel your new loan. This document contains information about when and how you can cancel your home loan and what happens if you decide to do so.
This form only applies when you are refinancing, so don’t expect to see this for purchase transactions.
What happens after you sign?
On closing day, you’ll sign all of the paperwork in the closing package and provide any cash required for your down payment or closing costs (in the form of a cashier’s check or bank wire). Soon after, your mortgage lender will fund your loan. And then your home purchase or mortgage refinance process will officially be complete!
Better Mortgage keeps you informed throughout the entire mortgage process. Plus, our resources help you understand what to expect and what you can do to prepare.
If you’re looking for a lender that can get you through closing 10 days faster than the industry average, we can help you with that, too.
How Much are Closing Costs for Sellers in Georgia?
If you're a current homeowner in Georgia, then you probably learned about closing costs when you purchased your first home.
These include things like lender fees and transfer taxes which most likely totaled between 3% to 4% of the sales price of your home.
Now, if you're considering selling your home, you'll be on the hook for closings costs again that can range anywhere between 5% to 10% of the sales price. These will include things like pro-rated property taxes and real estate commissions that you’ll now be on the hook for as the seller and will make the total cost much higher.
Here's an in-depth look at the closing costs you should expect to pay when selling your home in Georgia.
What are closing costs?
Closing is the last stage of the home selling process and the finalization of the sale for both the buyer and the seller. On the day of the closing, all documents are signed and mortgage everything i do i do it for you music video are released, finalizing the transfer of property ownership from the seller to the buyer.
At closing, both the seller and the buyer will be responsible for an array of closing costs and fees.
As the seller, your closing costs will mostly include real estate commissions and the transferring of the deed to your home while the buyer will mainly covers closing costs associated with their mortgage.
How much are closing costs in Georgia?
Though all of the taxes, fees, lender charges and insurance add up, generally neither the buyer or seller pays 100% of all the closing costs.
Typically, the seller will pay between 5% to 10% of the sales price and the buyer will pay between 3% to 4% in closing costs.
It's good to note however, that even though you may avoid the bulk of closing costs, you as the seller will still have to cover realtor commission costs which can add on as much as 6%.
How to Calculate Your Closing Costs in Georgia
So how much will you actually pay in closing costs for your home in Georgia?
To figure out an estimate of the amount you will pay, simply multiply the price of your home by the typical closing cost percentage of 5% to 10%.
For example, the current median home value in Georgia is $213,026. If you multiply this by the typical closing cost percentage (5-10%), you'll find that your closing costs will range anywhere between $10,651 and $21,302.
What's included in Georgia closing costs for both the buyer and the seller?
While closing costs are normally divided among the buyer and seller, nothing is set in stone.
As we mentioned above, all closing which document will list your monthly mortgage payment at settlement are negotiable, so it's important to be familiar with all of them in case your buyer requests you pay a portion of their closing costs.
Below, we have listed some of the most common closing costs in Georgia and how much you can expect them to be.
Common Georgia Seller Closing Costs:
- Real Estate Agent Commission – typically 6% of the sales price: Assuming you intend to leverage the expertise of a qualified realtor and the buyer also engages an agent to purchase your home, you’ll be responsible for paying both of them at closing. This amount can differ greatly from one agent to another, but it is typically 3% for each agent in Georgia. You can reduce this cost by 2% if you sell with a SimpleShowing agent for a 1% listing fee.
- Outstanding amounts owed on the property: You'll be responsible for any unsettled payments on your home that can include HOA fees (homeowner's association) and utility bills. All of these extraneous costs will be prorated to your closing date.
- Prorated Property Taxes: Property taxes in Georgia are paid in arrears. You’ll owe property taxes for the portion of the year you owned the house (be it 30 days or 300 days). They’ll be prorated based on the number of days you owned the home, so the amount you owe will be much higher for a November closing than one in early January (300 days vs. 30 days). Note: If your current mortgage payment includes an estimated amount for property taxes that they collect and put in “escrow”, then each month you should be able to get your escrow balance back after closing.
- Settlement Fee – typically $350 to $600: While you can avoid attorney fees (Georgia doesn't require an attorney to be present at closing), you'll still need to pay a settlement fee to the title company or escrow company for their services on closing day.
- Title search – $100 to $200: A title search looks into the home's ownership history to ensure you're the true owner and that the title is clear of any liens or judgements.
- Municipal Lien Search – $100 to $200: The municipal lien search looks into unrecorded property issues that aren’t shown in a typical title search, such as code violations, water/sewer/solid waste balances, and open or expired permits, to name a few. The cost varies by municipality.
- HOA estoppel – typically $200 to $500: This letter certifies how much you owe the HOA. It includes your monthly dues, as well as any special assessments, past dues, fines or other fees. Since the HOA could potentially put a lien on your home for unpaid dues or to enforce violations, the title company must confirm that you are in good standing with the HOA and current on all your dues before they can give clear title on the home.
- Documentary Stamps on the Deed – varies with price of the home: Also called a “transfer tax”, this tax is paid to your local county when the deed is how does a capital one secured mastercard work insurance – rate is set by the state and based on the purchase price: Owner's title insurance protects the buyer from issues blackberry stock price today arise with the title such as outstanding liens that were not discovered in the title search. The rates are set by the State of Georgia, but depend on the price of your home.
Common Georgia Buyer Closing Costs:
- Loan origination fees (optional) – 0.5% to 1.5% of the sales price: These costs relate to any associated loan fees including application fees, prepaid interest, and loan origination fees. While a loan is optional, these will be present if a mortgage is secured to purchase the home.
- Appraisal – $300 to $500: An appraisal determines the value of a home to assure the lender the property is indeed worth the amount they are giving the buyer. The appraisal is often paid by credit card up front and therefore not due at the time of closing.
- Survey (optional) – $350 to $500: Many lenders will require a survey of the property to determine the location of any buildings and the property's boundaries. Costs typically vary depending on lot size and type of property.
- Credit report – $25 to $75: This fee covers the cost for the lender to pull the buyer's credit history and credit score.
- Home inspection – $250 to $600: Conducted before closing, a home inspection will reveal any major issues with a home such as structural or foundational damage. Costs vary by company and city — for instance, in Georgia, a home inspection will cost you around $300 on average.
- Recording Fees – varies by county: This fee covers the cost of registering the sale and transfer of your property. Once the deed of transfer is recorded, it will become part of the public record.
- Transfer Taxes – varies with amount of the mortgage: Just as the seller typically pays the for the document stamps on the deed, the buyer typically pays document stamps on the mortgage, as well as the intangible tax for the mortgage. These amounts are based on the amount of the mortgage, not the purchase price of the property.
Should you pay the buyer's closing costs?
While it may seem counterintuitive to even consider paying for the buyer's closing costs, helping out the buyer can actually work to your benefit.
By paying for the buyer's closing costs or even a portion of those costs, you'll help ensure the sale of your home goes through smoothly. Buyers are saddled with the bulk of expenses in a real estate transaction — from the down payment and mortgage payments to property taxes and homeowner's insurance, so they can feel a financial strain.
Paying for some buyer closing costs can relieve the financial pressure on the buyer and provide them with enough financial cushion to sign on the dotted line.
How can you reduce your closings costs when selling your home in Georgia?
The best way to reduce your closing costs by a significant amount is to reduce the real estate agent commission.
Remember as the seller, you'll be responsible for paying all commission costs — both your agent's commission and the buyer's agent's commission. Typically, the standard commission rate is 6% of the home's sale price in Georgia.
For a home selling at the state's median sales price of $213,026, with a 6% average Georgia real estate commission, you'd be paying $12,781 in commission.
If those fees seem high, you'll want to explore all your options on how you can reduce the costs of selling your home and keep as much equity as possible at the time of closing.
At SimpleShowing, you can sell your home with an experienced, full-service agent who works for a fraction of the typical commission fee – 1% listing fee. If you were to sell the median priced home at $213,026, you'd profit about $2,890 more with a SimpleShowing agent.
A SimpleShowing agent can show you how to save thousands in realtor fees if you're selling in Georgia. Contact us to get in touch with a SimpleShowing agent in your area.
Key Takeaways for Georgia Home Sellers
It's important for homeowners to realize that selling your home will probably cost more than you initially thought — you'll be responsible for commission fees, potential repair costs, staging, and curb appeal expenses, transfer taxes and more.
To help you navigate all your selling costs, it's important to consult with an experienced real estate agent who can provide guidance on the best approach to sell your home so you get the best deal possible.
And if saving money is a top priority, SimpleShowing can help you put more money back in your pocket when selling your home in Georgia.
Connect with a full-service, top-rated agent in your area today who can help you save thousands on commission with our 1% listing commission.
12 CFR Appendix A to Part 1024 - Instructions for Completing HUD-1 and HUD-1a Settlement Statements; Sample HUD-1 and HUD-1a Statements
Appendix A to Part 1024 - Instructions for Completing HUD-1 and HUD-1a Settlement Statements; Sample HUD-1 and HUD-1a Statements
The following are instructions for completing the HUD-1 settlement statement, required under section 4 of RESPA and 12 CFR part 1024 (Regulation X) of the Bureau of Consumer Financial Protection (Bureau) regulations. This form is to be used as a statement of actual charges and adjustments paid by the borrower and the seller, to be given to the parties in connection with the settlement. The instructions for completion of the HUD-1 are primarily for the benefit of the settlement agents who prepare the statements and need not be transmitted to the parties as an integral part of the HUD-1. There is no objection to the use of the HUD-1 in transactions in which its use is not legally required. Refer to the definitions section of the regulations (12 CFR 1024.2) for specific definitions of many of the terms that are used in these instructions.
Information and amounts may be filled in by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Refer to the Bureau's regulations (Regulation X) regarding rules applicable to reproduction of the HUD-1 for the purpose of including customary recitals and information used locally in settlements; for example, a breakdown of payoff figures, a breakdown of the Borrower's total monthly mortgage payments, check disbursements, a statement indicating receipt of funds, applicable special stipulations between Borrower and Seller, and the date funds are transferred.
The settlement agent shall complete the HUD-1 to itemize all charges imposed upon the Borrower and the Seller by the loan originator and all sales commissions, whether to be paid at settlement or outside of settlement, and any other charges which either the Borrower or the Seller will pay at settlement. Charges for loan origination and title services should not be itemized except as provided in these instructions. For each separately identified settlement service in connection with the transaction, the name of the person ultimately receiving the payment must be shown together with the total amount paid to such person. Items paid to and retained by a loan originator are disclosed as required in the instructions for lines in the 800-series of the HUD-1 (and for per diem interest, in the 900-series of the HUD-1).
As a general rule, charges that are paid for by the seller must be shown in the seller's column on page 2 of the HUD-1 (unless paid outside closing), and charges that are paid for by the borrower must be shown in the borrower's column (unless paid outside closing). However, in order to promote comparability between the charges on the GFE and the charges on the HUD-1, if a seller pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD-1. That charge should also be offset by listing a credit in that amount to the borrower on lines 204-209 on page 1 of the HUD-1, and by a charge to the seller in lines 506-509 on page 1 of the HUD-1. If a loan originator (other than for no-cost loans), real estate agent, other settlement service provider, or other person pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD-1, with an offsetting credit reported on page 1 of the HUD-1, identifying the party paying the charge.
Charges paid outside of settlement by the borrower, seller, loan originator, real estate agent, or any other person, must be included on the HUD-1 but marked “P.O.C.” for “Paid Outside of Closing” (settlement) and must not be included in computing totals. However, indirect payments from a lender to a mortgage broker may not be disclosed as P.O.C., and must be included as a credit on Line 802. P.O.C. items must not be placed in the Borrower or Seller columns, but rather on the appropriate line outside the columns. The settlement agent must indicate whether P.O.C. items are paid for by the Borrower, Seller, or some other party by marking the items paid for by whoever made the payment as “P.O.C.” with the party making the payment identified in parentheses, such as “P.O.C. (borrower)” or “P.O.C. (seller)”.
In the case of “no cost” loans where “no cost” encompasses third party fees as well as the upfront payment to the loan originator, the third party services covered by the “no cost” provisions must be itemized and listed in the borrower's column on the HUD-1/1A with the charge for the third party service. These itemized charges must be offset with a negative adjusted origination charge on Line 803 and recorded in the columns.
Blank lines are provided in section L for any additional settlement charges. Blank lines are also provided for additional insertions in sections J and K. The names of the recipients of the settlement charges in section L and the names of the recipients of adjustments described in section J or K should be included on the blank lines.
Lines and columns in section J which relate to the Borrower's transaction may be left blank on the copy of the HUD-1 which will be furnished to the Seller. Lines and columns in buy numbing cream for waxing K which relate to the Seller's transaction may be left blank on the copy of the HUD-1 which will be furnished to the Borrower.
Line Item Instructions
Instructions for completing the individual items on the HUD-1 follow.
Section A. This section requires no entry of information.
Section B. Check appropriate loan type and complete the remaining items as applicable.
Section C. This section provides a notice regarding settlement costs and requires no additional entry of information.
Sections D and E. Fill in the names and current mailing addresses and zip codes of the Borrower and the Seller. Where there is more than one Borrower or Seller, the name and address of each one is required. Use a supplementary page if needed to list multiple Borrowers or Sellers.
Section F. Fill in the name, current mailing address and zip code of the Lender.
Section G. The street address of the property being sold should be listed. If there is no street address, a brief legal description or other location of the property should be inserted. In all cases give the zip code of the property.
Section H. Fill in name, address, zip code and telephone number of settlement agent, and address and zip code of “place of settlement.”
Section I. Fill in date of settlement.
Section J. Summary of Borrower's Transaction. Line 101 is for the contract sales price of the property being sold, excluding the price of any items of tangible personal property if Borrower and Seller have agreed to a separate price for such items.
Line 102 is for the sales price of any items of tangible personal property excluded from Line 101. Personal property could include such items as carpets, drapes, stoves, refrigerators, etc. What constitutes personal property varies from State to State. Manufactured homes are not considered personal property for this purpose.
Line 103 is used to record the total charges to Borrower detailed in section L and totaled on Line 1400.
Lines 104 and 105 are for additional amounts owed by the Borrower, such as charges that were not listed on the GFE or items paid by the Seller prior to settlement but reimbursed by the Borrower at settlement. For example, the balance in the Seller's reserve account held in connection with an existing loan, if assigned to the Borrower in a loan assumption case, will be entered here. These lines will also be used when a tenant in the property being sold has not yet paid the rent, which the Borrower will collect, for a period of time prior to the settlement. The lines will also be used to indicate the treatment for any tenant security deposit. The Seller will be credited on Lines 404-405.
Lines 106 through 112 are for items which the Seller had paid in advance, and for which the Borrower must therefore reimburse the Seller. Examples of items for which adjustments will be made may include taxes and assessments paid in advance for an entire year or other period, when settlement occurs prior to the expiration of the year or other period for which they were paid. Additional examples include flood and hazard insurance premiums, if the Borrower is being substituted as an insured under the same policy; mortgage insurance in loan assumption cases; planned unit development or condominium association assessments paid in advance; fuel or other supplies on hand, purchased by the Seller, which the Borrower will use when Borrower takes possession of the property; and ground rent paid in advance.
Line 120 is for the total of Lines 101 through 112.
Line 201 is for any amount paid against the sales price prior to settlement.
Line 202 is for the amount of the new loan made by the Lender when a loan to finance construction of a new structure constructed for sale is used as or converted to a loan to finance purchase. Line 202 should also be used for the amount of the first user loan, when a loan to purchase a manufactured home for resale is converted to a loan to finance purchase by the first user. For other loans covered by 12 CFR part 1024 (Regulation X) which finance construction of a new structure or purchase of a manufactured home, list the sales price of the land on Line 104, the construction cost or purchase price of manufactured home on Line 105 (Line 101 would be left blank in this instance) and amount of the loan on Line 202. The remainder of the form should be completed taking into account adjustments and charges related to the temporary financing and permanent financing and which are known at the date of settlement. For reverse mortgage transactions, the amount disclosed on Line 202 is the initial principal limit.
Line 203 is used for cases in which the Borrower is assuming or taking title subject to an existing loan or lien on the property.
Lines 204-209 are used for other items paid by or on behalf of the Borrower. Lines 204-209 should be used to indicate any financing arrangements or other new loan not listed in Line 202. For example, if the Borrower is using a second mortgage or note to finance part of the purchase price, whether from the same lender, another lender or the Seller, insert the principal amount of the loan with a brief explanation on Lines 204-209. Lines 204-209 should also be used where the Borrower receives a credit from the Seller for closing costs, including seller-paid GFE charges. They may also be used in cases in which a Seller (typically a builder) is making an “allowance” to the Borrower for which document will list your monthly mortgage payment at settlement that the Borrower is to purchase separately. For reverse mortgages, the amount of any initial draw at settlement is disclosed on Line 204.
Lines 210 through 219 are for items which have not yet been paid, and which the Borrower is expected to pay, but which are attributable what chase bank is open today part to a period of time prior to the settlement. In jurisdictions in which taxes are paid late in the tax year, most cases will show the proration of taxes in these lines. Other examples include utilities used but not paid for by the Seller, rent collected in advance by the Seller from a tenant for a period extending beyond the settlement date, and interest on loan assumptions.
Line 220 is for the total of Lines 201 through 219.
Lines 301 and 302 are summary lines for the Borrower. Enter total in Line 120 on Line 301. Enter total in Line 220 on Line 302.
Line 303 must indicate either the cash required from the Borrower at settlement (the usual case in a purchase transaction), or cash payable to the Borrower at settlement (if, for example, the Borrower's earnest money exceeds the Borrower's cash obligations in the transaction or there is a cash-out refinance). Subtract Line 302 from Line 301 and enter the amount of cash due to or from the Borrower at settlement on Line 303. The appropriate box should be checked. If the Borrower's earnest money is applied toward the charge for a settlement service, the amount so applied should not be included on Line 303 but instead should be shown on the appropriate line for the settlement service, marked “P.O.C. (Borrower)”, and must not be included in computing totals.
Section K. Summary of Seller's Transaction. Instructions for the use of Lines 101 and 102 and 104-112 above, apply also to Lines 401-412. Line 420 is for the total of Lines 401 through 412.
Line 501 is used if the Seller's real estate broker or other party who is not the settlement agent has received and holds a pay my cable bill online comcast against the sales price (earnest money) which exceeds the fee or commission owed to that party. If that party will render the excess deposit directly to the Seller, rather than through the settlement agent, the amount of excess deposit should be entered on Line 501 and the amount of the total deposit (including commissions) should be entered on Line 201.
Line 502 is used to record the total charges to the Seller detailed in section L and totaled on Line 1400.
Line 503 is used if the Borrower is assuming or taking title subject to existing liens which are to be deducted from sales price.
Lines 504 and 505 are used for the amounts (including any accrued interest) of any first keystone community bank berwick pa hours and/or second loans which will be paid as part of the settlement.
Line 506 is used for deposits paid by the Borrower to the Seller or other party who is not the settlement agent. Enter the amount of the deposit in Line 201 on Line 506 unless Line 501 is used or the party who is not the settlement agent transfers all or part of the deposit to the settlement agent, in which case the settlement agent will note in parentheses on Line 507 the amount of the deposit that is being disbursed as proceeds and enter in the column for Line 506 the amount retained by the above-described party for settlement services. If the settlement agent holds the deposit, insert a note in Line 507 which indicates that the deposit is being disbursed which document will list your monthly mortgage payment at settlement proceeds.
Lines 506 through 509 may be used to list additional liens which must be paid off through the settlement to clear title to the property. Other Seller obligations should be shown on Lines 506-509, including charges that were disclosed on the GFE but that are actually being paid for by the Seller. These Lines may also be used to indicate funds to be held by the settlement agent for the payment of either repairs, or water, fuel, or other utility bills that cannot be prorated between the parties at settlement because the amounts used by the Seller prior to settlement are not yet known. Subsequent disclosure of the actual amount of these post-settlement items to be paid from settlement funds is optional. Any amounts entered on Lines 204-209 including Seller financing arrangements should also be entered on Lines 506-509.
Instructions for the use of Lines 510 through 519 are the same as those for Lines 210 to 219 above.
Line 520 is for the total of Lines 501 through 519.
Lines 601 and 602 are summary lines for the Seller. Enter the total in Line 420 on Line 601. Enter the total in Line 520 on Line 602.
Line 603 must indicate either the cash required to be paid to the Seller at settlement (the usual case in a purchase transaction), or the cash payable by the Seller at settlement. Subtract Line 602 from Line 601 and enter the amount of cash due to or from the Seller at settlement on Line 603. The appropriate box should be checked.
Section L. Settlement Charges.
Line 700 is used to enter the sales commission charged by the sales agent or real estate broker.
Lines 701-702 are to be used to state the split of the commission where the settlement agent disburses portions of the commission to two or more sales agents or real estate brokers.
Line 703 is used to enter the amount of sales commission disbursed at settlement. If the sales agent or real estate broker is retaining a part of the deposit against the sales price (earnest money) to apply towards the sales agent's or real estate broker's commission, include in Line 703 only that part of the commission being disbursed at settlement and insert a note on Line 704 indicating the amount the sales agent or real estate broker is retaining as a “P.O.C.” item.
Line 704 may be used for additional charges made by the sales agent or real estate broker, or for a sales commission charged to the Borrower, which will be disbursed by the settlement agent.
Line 801 is used to record “Our origination charge,” which includes all charges received by the loan originator, except any charge for the specific interest rate chosen (points). This number must not be listed in either the buyer's or seller's column. The amount shown in Line 801 must include any amounts received for origination services, including administrative and processing services, performed by or on behalf of the loan originator.
Line 802 is used to record “Your credit or charge (points) for the specific interest rate chosen,” which states the charge or credit adjustment as applied to “Our origination charge,” if applicable. This number must not be listed in either column or shown on page one of the HUD-1.
For a mortgage broker originating a loan in its own name, the amount shown on Line 802 will be the difference between the initial loan amount and the total payment to the mortgage broker from the lender. The total payment to the mortgage broker will be the sum of the price paid for the loan by the lender and any other payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments. For a mortgage broker originating a loan in another entity's name, the amount shown on Line 802 will be the sum of all payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments.
In either case, when the amount paid to the mortgage broker exceeds the initial loan amount, there is a credit to the borrower and it is entered as a negative amount. When the initial loan amount exceeds the amount paid to the mortgage broker, there is a charge to the borrower and it is entered as a positive amount. For a lender, the amount shown on Line 802 may include any credit or which document will list your monthly mortgage payment at settlement (points) to the Borrower.
Line 803 is used to record “Your adjusted origination charges,” which states the net amount of the loan origination charges, the sum of the amounts shown in Lines 801 and 802. This amount must be listed in the columns as either a positive number (for example, where the origination charge shown in Line 801 exceeds any credit for the interest rate shown in Line 802 or where there is an origination charge in Line 801 and a charge for the interest rate (points) is shown on Line 802) or as a negative number (for example, where the credit for the interest rate shown in Line 802 exceeds the origination charges shown in Line 801).
In the case of “no cost” loans, where “no cost” refers only to the loan originator's fees, the amounts shown in Lines 801 and 802 should offset, so that the charge shown on Line 803 is zero. Where “no cost” includes third party settlement which document will list your monthly mortgage payment at settlement, the credit shown in Line 802 will more than offset the amount shown in Line 801. The amount shown in Line 803 will be a negative number to offset the settlement charges paid indirectly through the loan originator.
Lines 804-808 may be used to record each of the “Required services that we select.” Each settlement service provider must be identified by name and the amount paid recorded either inside the columns or as paid to the provider outside closing (“P.O.C.”), as described in the General Instructions.
Line 804 is used to record the appraisal fee.
Line 805 is used to record the fee for all credit reports.
Line 806 is used to record the fee for any tax service.
Line 807 is used to record any flood certification fee.
Lines 808 and additional sequentially numbered lines, as needed, are used to record other third party services required by the loan originator. These Lines may also be used to record other required disclosures from the loan originator. Any such disclosures must be listed outside the columns.
Lines 901-904. This series is used to record the items which the Lender requires to be paid at the time of settlement, but which are not necessarily paid to the lender (e.g., FHA mortgage insurance premium), other than reserves collected by the Lender and recorded in the 1000-series.
Line 901 is used if interest is collected at settlement for a part of a month or other period between settlement and the date from which interest will be collected with the first regular monthly payment. Enter that amount here and include the per diem charges. If such interest is not collected until the first regular monthly payment, no entry should be made on Line 901.
Line 902 is used for mortgage insurance premiums due and payable at settlement, including any monthly amounts due at settlement and any upfront mortgage insurance premium, but not including any reserves collected by the Lender and recorded in the 1000-series. If a lump sum mortgage insurance premium paid at settlement is included on Line 902, a note should indicate that the premium is for the life of the loan.
Line 903 is used for homeowner's insurance premiums that the Lender requires to be paid at the time of settlement, except reserves collected by the Lender and recorded in the 1000-series.
Lines 904 and additional sequentially numbered lines are used to list additional items required by the Lender (except for reserves collected by the Lender and recorded in the 1000-series), including premiums for flood or other insurance. These lines are also used to list amounts paid at settlement for insurance not required by the Lender.
Lines 1000-1007. This series is used for amounts collected by the Lender from the Borrower and held in an account for the future payment of the obligations listed as they fall due. Include the time period (number of months) and the monthly assessment. In many jurisdictions this is referred to as an “escrow”, “impound”, or “trust” account. In addition to the property taxes and insurance listed, some Lenders may require reserves for flood insurance, condominium owners' association assessments, etc. The amount in line 1001 must be listed in the columns, and the itemizations in lines 1002 through 1007 must be listed outside the columns.
After itemizing individual deposits in the 1000 series, the servicer shall make an adjustment based on aggregate accounting. This adjustment equals the difference between the deposit required under aggregate accounting and the sum of the itemized deposits. The computation steps for aggregate accounting are set out in 12 CFR 1024.17(d). The adjustment will always be a negative number or zero (-0-), except for amounts due to rounding. The settlement agent shall enter the aggregate adjustment amount outside the columns on a final line of the 1000 series of the HUD-1 or HUD-1A statement. Appendix E to this part sets out an example of aggregate analysis.
Lines 1100-1108. This series covers title charges and charges by attorneys and closing or settlement agents. The title charges include a variety of services performed by title companies or others, and include fees directly related to the transfer of title (title examination, title search, document preparation), fees for title insurance, and fees for conducting the closing. The legal charges include fees for attorneys representing the lender, seller, or borrower, and any attorney preparing title work. The series also includes any settlement, notary, and delivery fees related to the services covered in this series. Disbursements to third parties must be broken out in the appropriate lines or in blank lines in the series, and amounts paid to these third parties must be shown outside of the columns if included in Line 1101. Charges not included in Line 1101 must be listed in the columns.
Line 1101 is used to record the total for the category of “Title services and lender's title insurance.” This amount must be listed in the columns.
Line 1102 is used to record the settlement or closing fee.
Line 1103 is used to record the charges for the owner's title insurance and related endorsements. This amount must be listed in the columns.
Line 1104 is used to record the lender's title insurance premium and related endorsements.
Line 1105 is used to record the amount of the lender's title policy limit. This amount is recorded outside of the columns.
Line 1106 is used to record the amount of the owner's title policy limit. This amount is recorded outside of the columns.
Line 1107 is used to record the amount of the total title insurance premium, including endorsements, that is retained by the title agent. This amount is recorded outside of the columns.
Line 1108 used to record the amount of the total title insurance premium, including endorsements, that is retained by the title underwriter. This amount is recorded outside of the columns.
Additional sequentially numbered lines in the 1100-series may be used to itemize title charges paid to other third parties, as identified by name and type of service provided.
Lines 1200-1206. This series covers government recording and transfer charges. Charges paid by the borrower must be listed in the columns as described for lines 1201 and 1203, with itemizations shown outside the columns. Any amounts that are charged to the seller and that were not included on the Good Faith Estimate must be listed in the columns.
Line 1201 is used to record the total “Government recording charges,” and the amount must be listed in the columns.
Line 1202 is used to record, outside of the columns, the itemized recording charges.
Line 1203 is used to record the transfer taxes, and the amount must be listed in the columns.
Line 1204 is used to record, outside of the columns, the amounts for local transfer taxes and stamps.
Line 1205 is used to record, outside of the columns, the amounts for state transfer taxes and stamps.
Line 1206 and additional sequentially numbered lines may be used to record specific itemized third party charges for government recording and transfer services, but the amounts must be listed outside the columns.
Line 1301 and additional sequentially numbered lines must be used to record required services that the borrower can shop for, such as fees for survey, pest inspection, or other similar inspections. These lines may also be used to record additional itemized settlement charges that are not included in a specific category, such as fees for structural and environmental inspections; pre-sale inspections of heating, plumbing or electrical equipment; or insurance or warranty coverage. The amounts must be listed in either the borrower's or seller's column.
Line 1400 must state the total settlement charges as calculated by adding the amounts within each column.
Comparison of Good Faith Estimate (GFE) and HUD-1/1A Charges
The HUD-1/1-A is a statement of actual charges and adjustments. The comparison chart on page 3 of the HUD-1 must be prepared using the exact information and amounts for the services that were purchased or provided as part of the transaction, as that information and those amounts are shown on the GFE and in the HUD-1. If a service that was listed on the GFE was not obtained in connection with the transaction, pages 1 and 2 of the HUD-1 should not include any amount for that service, and the estimate on the GFE of the charge for the service should not be included in any amounts shown on the comparison chart on Page 3 of the HUD-1. The comparison chart is comprised of three sections: “Charges That Cannot Increase,” “Charges That Cannot Increase More Than 10%,” and “Charges That Can Change”.
“Charges That Cannot Increase.” The amounts shown in Blocks 1 and 2, in Line A, and in Block 8 on the borrower's GFE must be entered in the appropriate line in the Good Faith Estimate column. The amounts shown on Lines 801, 802, 803 and 1203 of the HUD-1/1A must be entered in the corresponding line in the HUD-1/1A column. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. If there is a credit in Block 2 of the GFE or Line 802 of the HUD-1/1A, the credit should be entered as a negative number.
“Charges That Cannot Increase More Than 10%.” A description of each charge included in Blocks 3 and 7 on the borrower's GFE must be entered on separate lines in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. For each charge included in Blocks 4, 5 and 6 on the borrower's GFE for which the loan originator selected the which document will list your monthly mortgage payment at settlement or for which the borrower selected a provider identified by the loan originator, a description must be entered on a separate line in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. The loan originator must identify any third party settlement services for which the borrower selected a provider other than one identified by the loan originator so that the settlement agent can include those charges in the appropriate category. Additional lines may be added if necessary. The amounts shown on the HUD-1/1A for each line must be entered in the HUD-1/1A column next to the corresponding charge from the GFE, along with the appropriate HUD-1/1A line number. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower.
The amounts shown in the Good Faith Estimate and HUD-1/1A columns for this section must be separately totaled and entered in the designated line. If the total for the HUD-1/1A column is greater than the total for the Good Faith Estimate column, then the amount of the increase must be entered both as a dollar amount and as a percentage increase in the appropriate line.
“Charges That Can Change.” The amounts shown in Blocks 9, 10 and 11 on the borrower's GFE must be entered in the appropriate lines in the Good Faith Estimate column. Any third party settlement services for which the borrower selected a provider other than one identified by the loan originator must also be included in this section. The amounts shown on the HUD-1/1A for each charge in this section must be entered in the corresponding line in the HUD-1/1A column, along with the appropriate HUD-1/1A line number. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. Additional lines may be added if necessary.
This section must be completed in accordance with the information and instructions provided by the lender. The lender must provide this information in a format that permits the settlement agent to simply enter the necessary information in the appropriate spaces, without the settlement agent having to refer to the loan documents themselves. For reverse mortgages, the initial monthly amount owed for principal, interest, and any mortgage insurance must read “N/A” and the loan term is disclosed as “N/A” when the loan term is conditioned upon the occurrence of a specified event, such as the death of the borrower or the borrower no longer occupying the property for a certain period of time. Additionally, for reverse mortgages the question “Even if you make payments on time, can your loan balance rise?” must be answered as “Yes” and the maximum amount disclosed as “Unknown.”
For reverse mortgages that establish an arrangement for the payment of property taxes, homeowner's insurance, or other recurring charges through draws from the principal limit, the second box in the “Total monthly amount owed including escrow payments” section must be checked. The blank following the first $ must be completed with “0” back at the barnyard episodes an asterisk, and all items that will be paid using draws from the principal limit, such as for property taxes, must also be indicated. An asterisk must also be placed in this section with the following statement: “Paid by or through draws from the principal limit.” Reverse mortgage transactions are not considered to be balloon transactions for the purposes of the loan terms disclosed on page 3 of the HUD-1.
Instructions for Completing HUD-1A
The HUD-1A is an optional form that may be used for refinancing and subordinate-lien federally related mortgage loans, as well as for any other one-party transaction that does not involve the transfer of title to residential real property. The HUD-1 form may also be used for such transactions, by utilizing the borrower's side of the HUD-1 and following the relevant parts of the instructions as set forth above. The use of either the HUD-1 or HUD-1A is not mandatory for open-end lines of credit (home-equity plans), as long as the provisions of Regulation Z are followed.
The HUD-1A settlement statement is to be used as a statement of actual charges and adjustments to be given to the borrower at settlement, as defined in this part. The instructions for completion of the HUD-1A are for the benefit of the settlement agent who prepares the statement; the instructions are not a part of the statement and need not be transmitted to the borrower. There is no objection to using the HUD-1A in transactions in which it is not required, and its use in open-end lines of credit transactions (home-equity plans) is encouraged. It may not be used as a substitute for a HUD-1 in any transaction that has a seller.
Refer to the “definitions” section (§ 1024.2) of 12 CFR part 1024 (Regulation X) for specific definitions of terms used in these instructions.
Information and amounts may be filled in by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Refer to 12 CFR 1024.9 regarding rules for reproduction of the HUD-1A. Additional pages may be attached to the HUD-1A for the inclusion of customary recitals and information used locally for settlements or if there are insufficient lines on the HUD-1A. The settlement agent shall complete the HUD-1A in accordance with the instructions for the HUD-1 to the extent possible, including the instructions for disclosing items paid outside closing and for no cost loans.
Blank lines are provided in section L for any additional settlement charges. Blank lines are also provided in section M for recipients of all or portions of the loan proceeds. The names of the recipients of the settlement charges in section L and the names of the recipients of the loan proceeds in section M should be set forth on the blank lines.
The identification information at the top of the HUD-1A should be completed as follows: The borrower's name and address is entered in the space provided. If the property securing the loan is different from the borrower's address, the address or other location information on the property should be entered in the space provided. The loan number is the lender's identification number for the loan. The settlement date is the date of settlement in accordance with 12 CFR 1024.2, not the end of any applicable rescission period. The name and address of the lender should be entered in the space provided.
Section L. Settlement Charges. This section of the HUD-1A is similar to section L of the HUD-1, with minor changes or omissions, including deletion of lines 700 through 704, relating to real estate broker commissions. The instructions for section L in the HUD-1 should be followed insofar as possible. Inapplicable charges should be ignored, as should any instructions regarding seller items.
Line 1400 in the HUD-1A is for the total settlement charges charged to the borrower. Enter this total on line 1601. This total should include section L amounts from additional pages, if any are attached to this HUD-1A.
Section M. Disbursement to Others. This section is used to list payees, other than the borrower, of all or portions of the loan proceeds (including the lender, if the loan is paying off a prior loan made by the same lender), when the payee will be paid directly out of the settlement proceeds. It is not used to list payees of settlement charges, nor to list funds disbursed directly to the borrower, even if the lender knows the borrower's intended use of the funds.
For example, in a refinancing transaction, the loan proceeds are used to pay off an existing loan. The name of the lender for the loan being paid off and the pay-off balance would be entered in section M. In a home improvement transaction when the proceeds are to be paid to the home improvement contractor, the name of the contractor and the amount paid to the contractor would be entered in section M. In a consolidation loan, or when part of the loan proceeds is used to pay off other creditors, the name of each creditor and the amount paid to that creditor would be entered in section M. If the proceeds are to be given directly to the borrower and the borrower will use the proceeds to pay off existing obligations, this would not be reflected in section M.
Section N. Net Settlement. Line 1600 normally sets forth the principal amount of the loan as it appears on the related note for this loan. In the event this form is used for an open-ended home equity line whose approved amount is greater than the initial amount advanced at settlement, the amount shown on Line 1600 will be the loan amount advanced at settlement. Line 1601 is used for all settlement charges that both are included in the totals for lines 1400 and 1602, and are not financed as part of the principal amount of the loan. This is the amount normally received by the lender from the borrower at settlement, which would occur when some or all of the settlement charges were paid in cash by the borrower at settlement, instead of being financed as part of the principal amount of the loan. Failure to include any such amount in line 1601 will result in an error in the amount calculated on line 1604. Items paid outside of closing (P.O.C.) should not be included in Line 1601.
Line 1602 is the total amount from line 1400.
Line 1603 is the total amount from line 1520.
Line 1604 is the amount disbursed to the borrower. This is determined by adding together the amounts for lines 1600 and 1601, and then subtracting any amounts listed on lines 1602 and 1603.
This section of the HUD-1A is similar to page 3 of the HUD-1. The instructions for page 3 of the HUD-1 should be followed insofar as possible. The HUD-1/1A Column should include any amounts shown on page 1 of the HUD-1A in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by the borrower. Inapplicable charges should be ignored.
[76 FR 78981, Dec. 20, 2011, as amended at 78 FR 80104, Dec. 31, 2013]
At 78 FR 80105, Dec. 31, 2013, appendix A to part 1024 was amended; however, amendatory instructions E wells fargo home mortgage hr phone number F could not be incorporated due to inaccurate amendatory instructions.
FHA Closing Costs – Complete List and Estimate
Home buyers will often create a budget to start saving for their down payment, but do not think about saving for their closing costs. In some instances, the FHA closing costs can be as much as or even more than the down payment.
This article will give you a credit account idea of how much your FHA closing costs will be, whether they can be financed and also how to get the seller to pay for them. You will also learn which closing jose gregorio de la rivera espiritismo are mandatory for all FHA loans, which costs are generated by the FHA lender, and which are third party costs that you would likely see regardless as to who your lender is.
How Much are FHA Closing Costs?
FHA closing costs average anywhere from 2% to 4% of the loan amount. Your actual costs will be tied to various factors such as your loan amount, credit score, and lender fees. Some of the costs are standard for all FHA loans, while others are lender-based or third party costs such as your appraisal.
Below is an itemized list of typical FHA closing costs. After you apply for an FHA loan, your lender will provide you with a good faith estimate detailing your closing costs.
When to Ask the Lender about FHA Closing Costs
We often hear borrowers immediately ask lenders what the FHA closing costs are in the first minute of the conversation. The lender will likely need to gather quite a bit of information and possibly run your credit score before giving you an accurate estimate.
Once you provide all of your details and documentation, the lender will provide you with a good faith estimate which will clearly outline exactly what your closing costs will be.
Click to Get a Rate Quote from an FHA Lender with LOW Closing Costs
List of FHA Closing Costs
Below is a standard list of FHA closing costs. These costs are just an estimate and the costs may differ slightly depending upon your scenario, the lender you use, third parties involved, your credit score, and location.
- Credit Report – ($25) The credit report is something every lender will need to charge you for. If you have your own credit report, it cannot be used for your loan. Every lender must run a new report which is automatically imported into your loan application with the monthly obligations populated.
- Loan Origination Fee – (.5% – 1%) This is a fee that some lenders will charge to help offset some commonwealth bank and trust hours their costs. Once their costs are covered, the rest is profit that the lender earns for helping with your loan. If you have a larger loan amount, your lender may be willing to reduce the origination fee percentage.
- Discount Points – (1%) We do not see discount points charged too often for FHA loans. You should only pay points when you are voluntarily buying your rate down to a lower percentage. If your lender is able to charge you 1 discount point (1% of which document will list your monthly mortgage payment at settlement loan amount) in exchange for a rate reduction of .5%, then it may be worth it.
- Underwriting Fee – ($350 – $975) Some lenders will charge an underwriting fee or processing fee. This is a fee that every lender may not charge and is likely negotiable. If you have a low loan amount, you can expect the lender to charge a fee like this to help with their costs of originating a small loan.
- Document Preparation Fee – ($50-$100) Some lenders charge a document preparation fee as an additional fee for managing all of the paperwork and documents related to your which document will list your monthly mortgage payment at settlement. If you are able to avoid the underwriting fee referenced above, then paying a document fee is not that bad.
- Home Inspection – ($300-$400) A home inspection is something that every home buyer should arrange for regardless as to whether you are getting an FHA loan. The inspection is not required by the FHA or the lender, but it is critical in helping to identify any critical problems the home may have. Consider hiring an additional inspector for the septic system if applicable.
- Appraisal – ($450) The lenders will require an appraisal for every home purchase to be sure the home is worth what you are paying. They do not want to lend money against a home that is worth less than the loan amount. The lender will need to use an FHA approved appraiser. Appraisal costs can be higher for more expensive homes or for multi-unit properties. The benefit of getting an appraisal is the ability tonegotiate with the seller after the inspection.If you are getting an FHA streamline refinance, then an appraisal is not needed.
- Survey – ($400-$500) A property survey will reveal the official property boundary and will also show all of the structures including your home, a shed, pool or any other permanent structure. The survey will help to identify whether your new neighbor has something encroaching onto your property. Most important is it will reveal whether your new home has an addition or a structure that was built too close to a property line and potentially would need to be removed. A copy of an existing survey may be on file at town hall. Secure a copy of this survey before paying for a new one. If the survey captures all of the structures that currently exist on your (and your neighbors) property, then you potentially can just use this copy rather walmart canada stock price today pay for a new survey.
- Attorney Fee – ($750) Many home buyers some use attorneys to review the contracts in an added layer of protection. Some lenders also have an attorney fee at closing that the borrowers need to pay for. The attorney will often manage the title related activities referenced below.
- Title Search – ($100) This is the fee charged by a title company to send someone to town hall to research whether there are any liens against the property you are about to purchase. Any open liens would need to be satisfied at closing. This title search will protect you against future claims for your property from a prior lien.
- Title Insurance – ($900 – $1200) This is an insurance policy that paid once at closing and it basically protects you against any future deed or lien claims against your property. Title insurance is calculated based upon your purchase price.
- Tax Service Fee – ($50) This fee is paid to research the existing property taxes for the property and to see whether the taxes have been paid to date or if they have been paid for future months. The taxes will need to be settled at closing based upon the findings of this research.
- Recording Fees – ($70) This is the fee charged by your local county government to record the official real estate transaction between you and the seller.
- Wire Transfer Fee – ($25) This cost is related to wiring the money needed to close your loan.
- Pre-Paid Property Tax – (Varies based upon property taxes of the home). You will likely have to pre-pay taxes for the upcoming quarter at closing. If the seller has already paid for the next few months, then he or she will get a credit at closing.
- Tax Escrows – (Varies based upon property taxes of the home). Some lenders prefer to pay taxes for you and will include taxes in your monthly mortgage payment. The escrow is a prepaid tax accrual so the lender has money on hand to pay the taxes on your behalf. If your property taxes increase, your lender will need to increase your mortgage payment to cover the difference.
- Notary Fees – ($10) not always a fee that is paid but there is the possibility that a fee for a notary could be required.
- Homeowner’s Insurance – ($400-$1200) You will be required to pay your first year’s homeowners insurance premium in advance. This is often done just prior to closing and you will need to show documentation that this has been done. The cost of your insurance premium is negotiated between yourself and the insurance company.Homeowners insurance prices may rise and falldepending upon factors that you may or may not have control over. They also could be higher if you also need flood insurance.
- Flood Certification Fee – ($15) The flood certification is the official opinion of FEMA as to whether the home you are purchasing is in a flood zone. It will help determine whether flood insurance will be needed and to what degree.
- FHA Upfront Mortgage Insurance MIP – (1.75%) This is an insurance policy of 1.75% of the loan amount and is standard for every FHA insured loan. This insurance premium covers the government cost of protecting the lender against the possibility that you default on the loan.
These are the standard and customary closing costs that you can expect for an FHA loan. When you compare FHA closing costs to conventional closing costs, one of the major differences is the upfront mortgage insurance cost of 1.75% of the loan amount. Most of the other costs would be similar regardless as to which loan program you choose.
Can FHA Closing costs be financed?
The FHA guidelines do permit some closing costs to be financed or rolled into the loan. Closing costs do not include your down payment amount and the FHA is clear that the minimum borrower contribution towards the purchase of the home must be at least 3.5% even if that money comes as a gift from a relative. If the gift from the relative is large enough, it can cover the down payment plus the closing costs.
The benefit of rolling the FHA closing into the loan is that it can help with some of thesticker shock associated with closing costs.
Can the Seller Pay for FHA Closing Costs?
FHA guidelines permit the seller to contribute up to 6% of the purchase price of the home towards closing costs. This is a great way to get a negotiated closing cost credit from the seller.
How Can I Lower the FHA Closing Costs?
The best way to get the lowest possible closing costs is to negotiate with the FHA lenders. They do have some wiggle room on the fees that are generated by the lender. It comes down to how much they are willing to make on your loan versus the other lenders out there. We can help you to get a quote from a lender who has competitive rates and closing costs.
If you speak to a lender who is offering no closing costs (or very little), then make sure the rate is still competitive. Some lenders may offset the low closing costs with higher rates.
Can FHA Closing Costs Be Gifted?
FHA closing costs can be gifted and would follow the same FHA gifting rules apply for closing costs as they do for the down payment.
Do FHA Closing Costs Include the Down Payment?
The down payment is not included in the closing costs and they are treated separately. FHA guidelines are clear that the borrower needs to come to the table with a minimum of 3.5% for the down payment even if that money is a gift. The closing costs can be funded by the seller, the lender, or any extra gift funds that are leftover.
FHA Gift Funds
FHA Credit Requirements
FHA Flipping Rule
Closing Costs for New Jersey Home Buyers: 5 Things to Know
Closing costs are a big concern for New Jersey home buyers, because they represent an out-of-pocket expense that typically must be paid up front. There’s also a lot of confusion surrounding this topic. With that in mind, here are five things you should know about home buyer closing costs in New Jersey.
1. Typical closing costs and pre-paid expenses for NJ home buyers are 2% to 3% of the purchase price.
The finalized amount of closing costs a buyer pays in New Jersey can vary, due to a number of factors. Generally speaking, a more expensive home will result in higher costs. But that’s portal edd ca gov webapp that can affect the amount you pay to close on your home.
As of 2017, home buyer closing costs in New Jersey tend to average somewhere between 2% to 3% of the purchase price. But they can fall outside of this range as well, in some cases.
New Jersey home buyers who buy a home for $400,000 with a 20% down payment pay approximatley $6,700 in closing costs (not including pre paid expenses). Prepaids are not a fee, but are costs associated with the home that are paid in advance when closing on a loan. These include Property Taxes, Homeowner’s Insurance, and Mortgage Interest that will accrue between the closing date and month-end. Property Taxes and Homeowner’s Insurance are collected to put into your Escrow Account so that you have enough reserves to pay these bills then they are due.But again, there are quite a few variables that can affect the amount of costs you encounter. And in some parts of the state, the median home price might be above the $400,000 figure used in this example.
2. Costs include lender and third-party fees.
The majority of all closing costs do not come from the lender.
“Closing costs” is actually a collective term that refers to all of the various fees buyers and sellers encounter during a typical real estate transaction. For home buyers in New Jersey, these closing costs can include such fees as mortgage-related, title insurance/search fees, government recording fees, surveys, appraisals, attorney and more.
3. The seller can contribute to your closing costs.
Depending on the type of mortgage loan you are using — and the real estate “customs” in your local market — you might be able to get the seller to contribute money toward your closing costs. This is a common strategy employed by New Jersey home buyers looking for ways to reduce their closing costs. Check with your mortgage lender to find out if this is a viable strategy in your area.
With most loan programs, the seller is allowed to contribute funds toward the buyers costs. But the rules vary depending on the type of mortgage loan that is being used. For example, the Department of Housing and Urban Development allows sellers to contribute up to 6% of the buyer’s closing costs, when an FHA loan is being used. Other mortgage programs may limit the seller concession to a lower amount, such as 3%. It varies.
4. A lender credit could further reduce your costs.
Depending on the details of your financing watch good morning america live, you might be eligible for a lender credit toward your closing costs. This is where you, as the home buyer and borrower, nys unemployment card keybank to take on a slightly higher interest rate in exchange for a credit.
In some scenarios, a slight increase in the interest rate could reduce the buyer’s closing costs by a significant amount. Please contact us if you have questions about this strategy, or anything else relating to New Jersey home buyer closing costs.
5. You will receive an estimate in advance.
When you apply for a mortgage loan, you should receive a document known as the “Loan Estimate.” As the name suggests, this document gives you an apple bank hours of the costs you will have to pay on closing day. Shortly before that date, you should receive a second document known as the “Closing Disclosure.” It will show the actual amount that is due.
Want a loan estimate? NJ Lenders Corp. can provide you with an estimate of your closing costs, as well as your monthly mortgage payments. Please contact us if you have any questions relating to this topic, or if you would like to receive a rate quote for a home loan.
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Cash to Close: What You Need to Know
As you approach the final stretch of the home buying process, one term you want to be familiar with is cash to close. Although this term does not directly refer to actual cash, cash to close is important because it does refer to the out-of-pocket costs you’ll need to pay prior to receiving the keys to your new home.
In this blog post, we take a deeper dive into what exactly cash to close is and what you can expect when figuring out the upfront costs associated with buying a home.
What Is Cash To Close?
Sometimes referred to as “funds to close,” cash to close is the total amount you are required to pay on the day of your closing. Your cash to close is made up of expenses such as your down payment, closing cost fees, and prepaid items.
Cash To Close vs. Which document will list your monthly mortgage payment at settlement Costs: What’s The Difference?
Although closely related, cash to close and closing costs are two different things. Cash to close refers to the entire amount you need to pay at closing, including the down payment and any other costs associated with the mortgage. Closing costs are a portion of the total cash to close amount, and are made up of various fees charged by the lender to originate the loan and transfer ownership of the property.
Cash to Close
Figures included as part of your cash to close amount may include:
- Down Payment: A percentage of the home’s purchase price paid upfront to the lender.
- Total Closing Costs: The amount of upfront costs, minus your down payment, required to complete your real estate transaction.
- Prepaids: Typically includes interest accrued on the loan between the closing date and end of that month, first year of homeowners insurance premiums, and other assessment costs. Some of these may be put into an escrow account.
- Credits: The amount(s) of any money already put down or fees already paid to your lender, shown as a deduction from your total cash to close.
The amount of your closing costs depends on the location of your home, the loan program you’ve selected, and your financial situation, among other factors. Common closing cost fees include:
- Application or Credit Report Fee
- Appraisal Fee
- Home Inspection Fee
- Pest Inspection Fee
- Origination Charges
- Private Mortgage Insurance
- Property Taxes
- Title Insurance Fee
How to Know the Amount of Your Cash to Close
At least three days before your closing date, you will receive a five-page document called a Closing Disclosure. This document highlights the total fees and expenses you need to pay for your home loan.
Page which document will list your monthly mortgage payment at settlement of your Closing Disclosure shows a summary of the loan terms, projected payments, and costs due at closing, including separate totals for your closing costs and cash to close amounts. Pages two and three show a breakdown of how your closing costs and cash to close amounts are calculated.
How Cash to Close is Calculated
Let’s take a look at this hypothetical Calculating Cash to Close section from a sample Closing Disclosure shared by the Consumer Finance Protection Bureau:
In the sample above, you can see how all the fees, credits, and prepaids are added and subtracted to determine the final amount of cash to close. The formula generally used is:
- Total amount of closing costs;
- MINUS any closing costs paid before closing and those rolled into the loan amount;
- PLUS down payment funds from the borrower;
- MINUS the borrower’s original deposit;
- MINUS any seller credits, adjustments, refunds, or other credits;
- EQUALS the total Cash to Close amount.
Ways You Can You Pay Your Cash to Close
The term cash to close is a little misleading since you will almost never pay this fee in cash. The method of paying your cash to close depends on which form(s) of payment your settlement company accepts. Common payment methods include:
- Wire Transfer: A wire transfer is an electronic way to send money to your lender.
- Cashier’s Check: A cashier’s check is a check that is issued and backed by the bank.
- Certified Check: A certified check is a form of a check that certifies that the check is legitimate and will not bounce as there are sufficient funds in your account.
Check with your lender and/or settlement company to verify which payment methods they accept for your cash to close. Make sure to do so a few days ahead of your closing date to avoid any last-minute scrambling.
Questions About Cash to Close?
Paying your cash to close is an exciting time, as doing so moves you one step closer to beach house weekend rentals emerald isle nc the keys to your new home. Understanding that your cash to close is an out-of-pocket expense and knowing how much money you’ll need can help you avoid any surprises. It’s also important that you check with your lender and verify what type of payment methods they accept. Every loan is different and it can be helpful if you are proactive and communicate with your lender.
If you have additional questions regarding cash to close, we’re here to help. Contact one of our loan officers today and they will bank of the west us locations happy to assist you!
The included content is intended for informational purposes only and should not be relied upon as professional advice. Additional terms and conditions apply. Not all applicants will qualify. Consult with a finance professional for tax advice or a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 7/18/2020.