Closing costs are part of any home buying experience. Although closing costs exist on every real estate transaction, underestimating the amount of closing costs is a common mistake for first time home buyers .
Understanding Closing Costs When Buying your New Home
Closing costs are essentially out of pocket charges that are incurred at the time of closing. These assessed fees are the last step in securing timely home ownership across the board. Usually, closing costs include pre-paid homeowners insurance and appraisal costs.
However, they can also include charges by the mortgage company for implementing the mortgage itself. Similarly, pre-paid interest – known as “points” – may also be assessed during closing time. Other fees may include title insurance, along with filing fees, attorney fees, recording fees and miscellaneous expenses.
Avoid Issues with Closing Costs
One of the best ways to avoid closing cost issues is by paying close attention to every detail. You simply cannot afford to get caught off guard at closing. This can result in costly delays, and possibly even turn you away from the deal altogether. With this in mind, is it vital to request an advanced copy of the HUD 1 settlement. This should be done at least three days prior to closing on your new homes. The HUD is designed to protect you during the closing process, and not worry about surprise fees on closing day. Here are some essentials you should keep in mind:
• Review the entire closing agreement – or let your attorney review it in close detail.
• Check all the closing costs and figures to make sure they are 100% correct. Point out any discrepancies or issues with credit or closing costs – and handle them ASAP.
• Stay on top of all buyer-seller- agent communications across the board. Make sure to include your lender and attorney in the loop as well.
• Make sure to keep hard copies of the HUD agreement on hand before, during and even after closing.
• Make sure everyone in the loop is on the same page -and correct any errors or issues that can potentially cause delays.
Schedule a Final Walk Through
Another way to avoid problems with closing costs is scheduling an final walk-through. This, of course, has to be done before closing day so you can check the home thoroughly. If you find any issues – you must notify the seller, agent or attorney at once. Remember, closing costs are governed by enforceable contracts – but all parties must be in agreement across the board.
This contract also includes any legal or governing bodies – especially HUD-related rules and regulations. If you do not want to delay your closing day, all closing costs must be taken care of beforehand as well. Again, make sure every penny is accounted for on the contract – and always take photos of your bills and receipts.
You also need a detailed checklist of what was supposed to remain the property – and what was to be taken. For example: if the fixtures were supposed to remain but a few are missing, early inspections can rectify the situations before they escalate and lead you to walk out on the deal.