About Closings

Closing Costs

Various fees associated with a home purchase are called "closing costs."

Both buyers and sellers usually pay closing costs. Ask your real estate agent about which you´re responsible for.

Sellers´ costs include:

Paying off loan charges
Brokerage fee
Transfer tax
Title insurance and escrow fee
All or part of a home protection plan

Buyers´ costs include:

Home loan fees
Title insurance
Transfer taxes
Inspector fees
Mortgage insurance
Attorneys´ fees
Hazard insurance
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To qualify for a home loan, you must show the lender enough cash on hand for the down payment and closing costs. In addition, you usually have to have enough for several months´ mortgage.

One way to reduce closing costs is to get a no-point loan; you may have to pay a higher interest rate, but it saves you money up front.
Another way is to purchase a home late in the month - less interest will be owed to the lender.
Lenders won´t allow a seller to credit money towards a buyer´s cash down payment, but will allow them to cover some, or all, of the non-recurring closing costs.
One way to convince a seller to cover non-recurring closing costs is to increase the purchase price; the catch, however, is that the lender will have to appraise the property at the higher price or the deal might fall apart.
Lenders´ policies vary: some permit credit for all non-recurring closing costs; others limit it to 3.6% of the purchase price.
Some portfolio lenders, however, are more lenient: they´ll pay all non-recurring closing costs in exchange for a higher interest rate.
In a slow market, a seller or builder will usually pay at least some of the non-recurring closing costs.
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Should I Test for Toxic Substances?

Once rare, toxic substance inspections are now a routine part of most real estate contracts, as people have become more aware of the potential dangers such substances pose.
Unfortunately, most home inspectors lack the qualifications to do the specialized tests necessary to find toxic substances. You must therefore use toxic substance inspectors.
Here are some of the most dangerous toxic substances:
Radon it´s a radioactive gas that seeps in to your house through cracks in your foundation. According to the EPA, it´s the second-leading cause of lung cancer in the US (after cigarettes). Of the home buyers who actually check for it, about 20% will find it at unacceptable levels. Although it´s possible to buy a home test kit, it´s best to let a professional handle the job. For more information, call the EPA radon hotline at (800) SOS-RADO.
Asbestos it´s a microscopic airborne fiber that causes lung cancer. If you´re buying anything built since the mid-70s, you probably don´t have to worry about it. If you´re buying an older home, however, a specialist can tell you if it presents any danger. For more information, contact your local OSHA (Occupational Safety and Health Administration) office, or your local Consumer Products Safety Commission office.
Lead usually found in paint or water pipes in older homes (it´s been banned for 20 years), it causes mental and physical development problems. Testing usually costs between $100 and $300. If the water is contaminated from its source, you may need a filtering system, or simply buy a home in another area. For the more information, contact the Consumer Product Safety Commission.
Electromagnetic Radiation though still controversial, some studies seem to indicate that exposure to radiation from high-voltage power lines may cause cancer and other diseases. Power companies deny it, but you may not want the risk. A test for this problem costs between $100 and $250, depending on the house.
Real estate attorneys advise that the language you use should state that the "sale is contingent upon satisfactory results of the tests." You don´t want the language to suggest that you have the right to the tests but not the right to back out of the deal if the house fails any of the tests.
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Home Inspection Check List

A good home inspector is:

Experienced.
Professionally qualified (such as a licensed contractor or engineer).
Employed full-time as a home inspector.
Not in the business of repairing defects discovered during an inspection.
Licensed by the state (where applicable).
A member of a professional home inspector´s association like ASHI (American Society of Home Inspectors 1-800-743-2744).
Covered by errors and omissions insurance.
Willing to have you attend the inspection.
Able to provide a comprehensive home inspection.
Willing to provide at least three references (names and phone numbers).
Able to provide a written report within two or three days.
Available to answer your questions in the future.
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Home Inspection and Apprasial

Why do I need a Home Inspection and Appraisal?

Getting a good inspector to inspect the house before buying is essential. Sellers may cover up major problem areas in the house. So it is in your best interest to get a good inspection, but the lender will most likely require one as well. The lender will not want to take risk on a house, if they are not confident that you are getting the house at a good price without any unforeseen problems (certain loans will only require a drive-by inspection).
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A Quick List of Things you should know about what to expect from a Home Inspection:

A good inspector will check the house from basement to roof, including plumbing, heating, cooling and electrical systems, roof, floors, walls, ceilings, insulation, ventilation, doors, windows, wells, septic or sewer, foundation and the visible structure of the house.
The inspector would suggest any repairs needed.
When considering a particular inspector, ask for at least three references and check them out.

A reputable inspector will never offer to perform needed repairs and should not refer you to a contractor to perform such repairs.
You can find a good inspector by getting a referral from a satisfied customer. Avoid referrals from anyone who has a financial interest in the sale going through.
The cost of an inspection varies with the area. It may start from $100 and go up to $400 or even more at times.
Be sure to ask the inspector about their liability insurance coverage including "errors and omissions" (E & O) or malpractice insurance that covers inspector negligence.
Ask for a written report within a day or two from the inspector.
Make sure that you accompany the inspector during inspection. The main advantage of this is that you´d learn a few maintenance tips.
Do your homework before you accompany the inspector. Use the checklist below to identify any problem areas in case your inspector overlooks them. Get a list of some inspectors/appraisers.
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Checklists of things to look for when doing a self inspection of the house:

Are there large cracks or shifts in the foundation?
Are there leaks or watermarks around eaves and downspouts outside the house or windows and ceilings inside the house?
Does the basement look or smell damp? Does the owner store his/her belongings everywhere but on the basement floor?
Is the house tightly sealed? Are there drafts from any windows, doors, attic areas or crawl spaces? How much are the energy bills?
Does the drainage lead away from the house and appear to be in good condition? Do soggy spots on the lawn exist? Are any trees too close to the house or look to be unhealthy or dead?
What is the condition of the roof?
Are there a lot of nail pops inside the house or do the floors creak or give in when I walk on them?
Is the water clear and odor free? How is the water pressure? Are there unusual noises when the plumbing is active?
Are there 3-pronged safety outlets or are appliances plugged in with adapters or extension cord? Do the lights flicker?
Is a piece of furniture sitting in an unusual place hiding a stain or hole in the carpet?
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Appraisal/Valuation

Legally, you are required to carry out an appraisal of the house, before you apply for mortgage. Even banks insist on valuation of property.

An Appraisal (or Valuation) is inspection of the house to determine its value, so that the lender can assess how much it may lend. It is not a survey and is usually paid by the buyer who receives the copy of the report. Valuation is limited compared to a survey; it also identifies areas that require more detailed inspection by a specialist.
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Why Do You Need Title Insurance?

How do you prove that a seller actually owns the home he or she is trying to sell? You conduct a title search, in which a chain of ownership from the time the home was built until the present is established.
Title searches vary from place-to-place, but they´re generally done manually, by lawyers, title companies, or other title specialists, because historical real estate documents are rarely recorded on computers.
A title search is necessary because the lender needs to know whether there have been any liens, judgments,or easements filed against the property, which might prevent you from being granted a good title.
Title insurance helps protect the buyer from possible "defects" on the title. If any of the documents that establish the title are mistaken or omitted, for instance, and it turns out that the property is less valuable than originally appraised, the title insurer will reimburse them for lost value.
If the insurer notes a defect before the sale, however, the buyer is responsible for contacting the seller and correcting it.
Title insurance is paid as a one-time premium; the cost is based entirely on the sales price of the home.
In most cases, the seller pays for the title search so he or she can guarantee that the buyer gets a good title. The lender, meanwhile, will want the buyer to pay for the title insurance to cover the lender. It´s not strictly necessary for the buyer to cover him or herself, but it´s usually a good idea. If you buy both the lender´s and buyer´s title insurance together, you may get a discounted rate.
If you´re working with a real estate attorney, they can also often obtain discounted rates if they work regularly with a title company.
Finally, if the seller has only owned the home for a short period of time, the seller´s original title company may be willing to issue the buyer a discounted "reissue" rate.
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