On closing day, there will be a number of extra costs that you may not have been expecting, although they should have been mentioned to you at various times of the process by the lender and the broker. These costs are make up of the following things.
Fees to the Attorney and Escrow Fees. You may have to pay the lender's attorney fees as well.
Property taxes that are due to cover to that date.
Any interest that is due from the closing date to 30 days before your first payment is due.
A Loan Origination Fee, which covers administrative costs.
Any recording fees for paperwork.
A Survey fee for the land.
Your first month's premium for your mortgage insurance, if you were forced to get some.
Title Insurance for both you and the lender.
Any loan discount points you may have accumulated.
You must make your first payment into escrow on your future property taxes and insurance.
You must pay for homeowner's insurance, complete with protection against natural disaster insurance if you live in a high risk zone.
Fees to pay for all of the documentation that was prepared for you.
WHAT CAN I EXPECT TO HAPPEN ON CLOSING DAY
On closing day, you can expect to have to present your receipt of your home insurance so your premium must have been paid. Then a closing agent will present you with a list of the money that you owe and any money that the seller owes you, as per your agreement. The sellers also has to provide you with proof of inspection and let you know about any warranties on the products within the house.
After this, you can sign the mortgage agreement, which basically states that if you miss any payments or default in any way, the lender has the right to sell your property and then apply any money that is made on the deal against what you owe, plus any expenses associated with this process. Your mortgage also states that you promise to repay the loan in full and the seller will then give you the signed deed to the house.
You will then pay the lender anything that is owed, such as closing costs, and the lender will give you a receipt of all of the items that you have paid for. Once all of this is recorded, you own the house and you are free to do what you want with it.
WHAT MAKES UP CLOSING COST
The Settlement Statement, which is a statement that outlines all of the expenses that you are paying for in this process.
A Truth-in-Lending Statement, which states that you have told the truth about all of the information that you have provided.
Mortgage Note, which is a representation of your mortgage in writing.
Mortgage or Deed of Trust and documentation of this.
Binding Sales Contract, which is the term on which the home was bought. The seller will provide this so have your attorney take a look at it.
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