Mortgage Settlement Sanity
After finding a lender and choosing a mortgage, the last thing
you want is to have anything more to think about, right? Unfortunately,
mortgage settlement tends to be one of the most confusing parts
of the mortgage or home buying process. Here are some facts that
may help make this stage less complicated for you.
First you should know that a mortgage settlement often involves
many different people, along with several documents and fees.
The process begins weeks or months before the closing of the home
and follows an outline set mostly by the buyer’s first offer
to the seller of the home. The offer becomes a sales contract,
which then becomes the reference for settlement and/or closing.
The party responsible for closing costs differs from location
to location and varies depending on the parties and unique circumstances,
but buyers and sellers have the freedom to negotiate their own
fees. Some costs may cause other costs to shift, such as a lowered
closing fee causing the sales price to rise.
Three general closing costs exist during the settlement. First
there are charges for the transfer and establishment of ownership.
These charges include any legal fees, insurance and the title
search. Next there are federal and state charges. These can be
prepaid property taxes, city, county and state transfer fees and/or
Finally there are the costs of the mortgage itself. This includes
survey, appraisal, loan documentation fees and processing fees,
notary charges, credit checks, hazard insurance, loan origination
fees, discount points (if any) and the mortgage company’s
Other Miscellaneous closing costs such as home inspection will
be required. When you are taking over or adding to an existing
mortgage, there will probably be an assumption fee. This amount
varies from lender to lender, but it can be anywhere from a few
hundred dollars to one percent of the loan amount.
Other adjustment costs may occur, and some of these adjustments
are prorated between the seller and buyer or split between the
two parties. Again, all of these costs vary and there are always
plenty of exceptions.