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I want to buy a house, but i dont know the process very well, as far as how much extra there is at closing cost. What is escroe
I want to buy a house, but i dont know the process very well, as far as how much extra there is at closing cost. What is escroe
Tags: Buy House, Chicago West Suburbs, Closing Cost, House Foreclosures
June 18th, 2007 |
Tags: Buy House, Chicago West Suburbs, Closing Cost, House Foreclosures
June 20th, 2007 at 4:39 am
Here is the process to buy a house:
0) Get pre-approved for a mortgage with any Major bank;
1) Make an offer and attach your pre-approval from step 0;
Put in a firm closing date;
Put in the following contingencies:
Financing - no more than x%, whatever terms you want, etc;
House Inspection;
Termite inspection;
Survey and environmental — usualy needed for
commercial props only, or when you are buying land
parcels;
Contingeny clauses allow you to walk away if you can not
get financing, or the house fell apart and the ants ate it
right after your offer was accepted;
Attach a downpayment with your offer. This gets placed
into ‘ESCROW’ by the sellers broker, attorney or title
company. ESCROW is a special account that is set up
in order to assure that the funds do not go to the seller and
dissappear. ESCROW will disburse at closing, when the
seller receives your downpayment funds. If there was no
closing due to various reasons and especially issues with
step 7, below, you will not lose money.
2) If offer is acceepted, go to the bank from step 0 and apply for a loan. You will need to supply a bunch of info, proof of funds etc. Make sure you ask them what their fees and rates are, and if they are not reasonable, go to another bank!
3) Order a home inspection, order a termite inspection, order survey and environmentals (if required);
4) Make sure that step 3 stuff was fine, else re-negotiate or walk away;
5) The bank will appraise the property to make sure that it is worth what you are paying. Bear in mind, a signed contract
is a pretty good indicator of value, so unless you are blatantly
overpaying the appraisal will be fine. BTW, you will likely
get a yes/no answer from the bank. They may not even give you the number the appraiser came up with.
6) Prove to the bank that you are the safes thing to lend money to on this Earth and then get approved for the mortgage;
7) Get on your knees and pray that you will have a successfull
Call a title company and order title search. This will
closing and that the bank will not screw you.
prove house ownership, let you know all the liens on the
property, all outstanding debts on the property, etc.
It takes 5-7 days to get title search done;
VERY IMPORTANT — Title clerk will tell you if the seller
can sell you the house, and how clean the title is. Title
clerk will also issue a list of things that the seller needs to
bring to closing in order for the closing to take place.
LISTEN TO YOUR TITLE CLERK.
They will also issue you title insurance which guarantees
that your house is free and clear of all liens and debt, and
is truly yours!
Order a closing protection letter from the title clerk for the
mortgage bank after the title comes back;
9) Repeat step 7;
10) Make sure whatever issues came out from step 3 are
resolved;
11) Repeat step 7;
12) Order a home owners insurance for your house. Set it up
so that you pay for the policy at closing. So, if no closing,
you do not pay.
13) Repeat step 7;
14) Closing is tomorrow — go to the house, and make sure
that it is still there, etc.
15) Repeat step 7;
16) You are now at closing. You have been there for 3 hours,
and the bank has not yet really, truly approved your
mortgage. You are stressed to the max, your BP is going
through the roof!
If you like, you can scream at the realtor, at the seller, at
the title clerk. It won’t help, but it may make you feel better.
But if you repeated step 7 often, and the providence
smiles, you may just walk away with a house
Here are your closing costs:
Bank fees such as application fees, appraisal, origination, etc.
Title insurance. This depends on the value of your house.
Ballpark it for 1% of the price;
Property insurance. (Remenber, you are paying this at closing) .6-.8% of purchase price;
Deed prep - fee title co charges for typing up the deed;
Deed recording. Fee to record the deed. Not expensive.
Mortgage tax. This is only charged in some areas.
Transfer tax — tax county charges at the purchase or sale
of the property. In PA this is 4% split between seller and buyer;
Pro-rated property taxes - you pay only from settlement
till the end of the year;
Attorney fee–you may be in the area that requires this. Like NY. If so, and you read the above material carefully, prepare to spend several grand for no good reason. Been there,
done that, had no choice. It stinks!
Notary fees & some oter small misc fees.
Good Luck!