Buying Your Home - Escrow & Closing Costs |
How can I save on closing costs?
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:
Who pays the closing costs?
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.
What are closing costs?
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.
Where do I get information about closing costs?
For more on closing costs, ask for the "Consumers Guide to Mortgage
Settlement Costs," Federal Reserve Bank of San Francisco, Public
Information Department, P.O. Box 7702, San Francisco, CA 94120 or call (415)
974-2163.
Why do I need a title report?
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.