Closing costs are often confusing. To help clarify, we have constructed this mini-glossary of standard closing costs. When you apply for your loan, you will receive a Good Faith estimate of these charges, as well as an explanatory booklet.
|Appraisal fee||A one-time fee to pay an independent fee appraiser.|
|Credit Report Fee||A one-time fee covering the cost of the credit report.|
|Document Preparation Fee||There may be a separate fee covering the preparation of the final legal papers.|
|Homeowners Fee||Some associations may require an upfront deposit or dues, as well as a fee to transfer their records from seller to buyer (transfer fee). These amounts vary for each association.|
|Loan Discount||A one-time fee to adjust the yield on the loan to what market conditions demand (often called POINTS).|
|Loan Origination Fee||A one-time set up fee charged by the lender for their|
|Miscellaneous Title Charges||The title company may charge fees for items such as: title examination, document preparation, recording fees, notary fees, and a closing or settlement fee.|
|PMI Premium||Depending on your down payment, you may have to pay an upfront fee for mortgage insurance. Lenders may also require monies to be held by them in a|
|Prepaid Interest||This is a per diem charge that may vary depending on the time of month your loan closes.|
|Taxes and Hazard Insurance||Depending on the month your property closes, you may be required to reimburse the seller for property taxes. You will have to pay a year’s hazard insurance premium up front, and may be required by the lender to put a certain amount for taxes and insurance in a reserve account. This account is held by the lender.|
The Seller’s Property Disclosure Statement (“SPDS”)
This document poses a variety of questions for the seller to answer about the property and its condition. This 6 page form asks specific questions about your home and was designed to help you fulfill the disclosure requirements. Please note that the SPDS is not a substitute for a Buyer’s Inspection nor is it a warranty of any kind.
Insurance Claims History
The seller is obligated to deliver a written 5 year insurance claim history regarding the premises (or claims history for the length of the time the seller has owned the premises if less than 5 years), from the sellers insurance company, an insurance support organization, such as a Comprehensive Loss Underwriting Exchange (C.L.U.E. Report), a consumer reporting agency, or if unavailable from these sources, from the seller, within 5 days after contract acceptance.
Relationships with Agency
It is required that Realtors and their clients record the nature of their working relationship. There are many different types of agency relationships that are appropriate. They are as follows:
The Buyer’s Broker
A Buyer’s Broker works only for the Buyer and has fiduciary responsibilities to the Buyer. These responsibilities include “undivided loyalty, reasonable skill and care, confidentiality, obedience, advocacy, accountability and disclosure.”
However, a Buyer’s Broker must also treat all parties, including the Seller and the Seller’s agent, fairly and honestly and must not misrepresent on matters that apply to the transaction.
NOTE: Sellers and their agents have similar relationships. The Seller’s Agents have the same responsibilities and obligations to their clients.
The Limited Dual Representative
Limited dual representation occurs when a Buyer client wishes to view a listing represented by another RE/MAX Fine Properties agent.
In this particular case, the RE/MAX Fine Properties broker would represent both the Buyer and the Seller in a transaction. This is done with limitations on the duties owed to both. These limitations would include the disclosure of confidential information.
In essence, a brokerage firm involved in a limited dual representation will not be able to put one party’s interest ahead of those of the other party and cannot advise or counsel either party on gaining an advantage at the cost of the other party.
In most cases, real estate contracts allow a physical inspection period for the buyer. This is the time to identify existing and potential problems in the property. For most of us, this is a nerve racking process we are not knowledgeable about. This is the time to turn to a professional home inspector. Home inspectors identify problems and assist in promoting and facilitating communication with the seller. This is a sizeable investment you are making, possibly the largest in your life. You may save substantial amounts in the future by investing a small amount now.
Here are some areas Inspectors look at:
Home inspection organizations have set standards on areas of the home that the inspector looks at to determine the integrity of the essential internal and external structural components. Inspectors are not structural engineers, but can identify visual defects in areas requiring immediate repairs.
Do all the outlets work? Does the house use fuses or is there a breaker box? Are there any signs of fraying on the wiring?
Are there any leaks or annoying drips? Are all the mechanical systems and fixtures working properly? Built-In Appliances: Are they functioning properly?
- Safety Hazards
Inspectors are not environmental specialists, but they can identify a number of safety hazards and dangerous conditions.
Other items may or may not be included in standard home inspections. Some may be: Septic systems, roofs, drainage, wood decks, patios or other exterior structures.
- Normally Not Included
Termite, radon, mold, geological or land subsidence surveys and environmental or pollution inspections should be completed separately for your own protection.
Home warranties are policies designed to protect the buyer against repair costs of mechanical systems and major appliances. This warranty is sometimes offered by Seller or may be negotiated in the contract. There are a variety of plans covering items such as: heating, air-conditioning, dishwashers, garbage-disposals, etc. We will be happy to gather a selection of warranty plans for you.
Benefits of Home Warranty Protection:
- Coverage for your major mechanical systems and built in appliances
- A full network of well qualified technicians at your service
- Your budget is protected against unexpected repair bills
- All of the above for a very low deductible/service call