Answers to Frequently Asked Questions
What are closing costs?
Closing costs are an accumulation of charges paid to different entities
associated with the buying and selling of real estate. For buyers, they
are usually about 4-6% of the total sales price of a property. Some of the
closing costs you might encounter are: application fees, appraisal fee,
county taxes, credit report, discount points, documentation fee, escrow
fees, homeowners' association fees, loan fees, mortgage insurance, origination
fees, tax registration and title insurance premium.
What is a point?
One point is equal to 1% of the new loan amount. Whenever government
regulation, state usury laws and/or competitive practices prohibit the lender
from charging a rate of interest that would make the real estate loan competitive
with other fields of investments, the lender must seek some method of increasing
the yield for the investors. By charging "points", the lender
can bring the real estate loan up to those other investments.
What is earnest money?
When you make an offer, you will need to put up an earnest money deposit
as a sign of good faith that you are seriously interested in buying a home.
That deposit becomes a part of the purchase price and is held in a trust
account until there is full acceptance of the offer. Typically, an earnest
money is 1-5% of the offer amount.
What is title insurance?
Title insurance protects the named insured against loss because of defects,
liens, encumbrances, adverse claims or other matters not shown or disclosed
to the new owner that attach before date of policy.
Is VA or FHA financing unfair to sellers?
FHA and VA loans provide purchasers the opportunity to buy homes with
minimal cash investment and at lower interest rates. The result is a larger
market for sellers, who also benefit by receiving all cash for their equity.