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 recordation costs.

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 inspection fees.

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.