Understanding Mortgage Closing Costs

When you purchase a home with a mortgage, there are still a number of costs you need to pay up-front. One of these costs is the down payment on the loan. The other costs all fall under the umbrella of "closing costs." These are various fees you pay to the bank, the attorney, your title settlement service, and other individuals and companies involved in the real estate transaction. 

It's important to be an informed buyer, and part of being an informed buyer is knowing where various closing costs come from. Here are the typical closing costs you'll pay when buying a home.

Loan Application Fee

This is a fee is paid to the bank to cover the costs associated with you applying for a loan.

Escrow Fee

At closing, you will generally be asked to pay several months' worth of taxes and mortgage insurance payments into an escrow fund. This is bundled into the escrow fee. The funds will be kept in your escrow fund once the loan closes.

Lender's Title Insurance Fee

Title insurance protects the lender if any defects in the title arise after closing. The fee for this insurance is paid to a real estate title company.

Owner's Title Insurance Fee

You have the option of purchasing title insurance to protect you, the new owner of the home, from defects in the title. If you want this insurance, you'll pay for it during closing.

Credit Report Fee

The bank will need to access your credit report in order to make you a loan offer. The fee for this credit report will be passed on to you.

Private Mortgage Insurance Premium (FHA Insurance Premium)

If your down payment is less than 20% of the home cost, you'll generally be required to have private mortgage insurance. The first month's premium is typically due at closing.

HOA Transfer Fee

If your new home is a part of a homeowner's association, you'll generally pay an HOA transfer fee to put the home into your name with the association.

Prepaid Daily Interest

Interest will accrue on your mortgage between your closing date and the first mortgage payment. You'll pay this interest at closing as a fee called "prepaid daily interest."

Survey and Recording Fee

The survey fee goes to the company that checks and establishes the property's boundaries. A recording fee goes to the county clerk's office for the processing of these records.

Title Search Fee

The title search will reveal any liens on the property or other possible discrepancies with the title. The fee for this service is paid to your PA settlement service at closing.

Transfer Fee

Many municipalities charge a transfer fee or transfer tax when ownership of a property changes. Costs vary widely from town to town and county to county.

Now that you understand these closing costs, you can enter the next real estate transaction as an informed buyer. If you're looking for a "title search company near me" to work with you through the process, contact Heritage Land Transfer. We have a great network of real estate professionals to hold your hand through it. If you need a real estate escrow company, know that we offer escrow services too.

Our guaranteed lowest rates for title insurance, and our customer-centric, efficient title search and closing process helps our client reduce a lot of the stress and risk associated with real estate transactions. Contact us today.

This blog was originally posted on https://landtransfer.com/understanding-mortgage-closing-costs/

Title Insurance FAQs: Everything You Should Know

Most people only purchase title insurance a couple of times in their life. So it's not at all unusual for customers to have questions about this. We believe that all title service customers deserve to have a thorough understanding of what they're buying and why it is important. As such, we are always happy to answer our customers' questions about title insurance. Below, you'll find some of the most common questions we receive — along with their answers.

What are the two types of title insurance?

The first type of title insurance is owner's title insurance, which protects your interest in the home as its owner. The second type is lender's title insurance, which protects the bank that holds your mortgage. Lender's title insurance is required in most cases. Owner's title insurance is not always required, but it is highly recommended. The best title insurance companies will talk with you about your risk and help you decide whether an owner's policy is needed.

Do you need owner's title insurance and homeowners insurance?

Sometimes customers assume that if they have homeowners insurance, they don't need owner's title insurance. However, both types of insurance are important because they cover different risks.

Homeowners insurance applies to your home and physical property.  The owner's title insurance protects the deed to your property and your actual ownership of the property. If any liens against the property or other defects in the deed were to be discovered after closing, title insurance would protect your ownership of the home. It would also pay for any fees or costs related to the discovery.

Do you need title insurance when you refinance?

When you refinance a mortgage, you do still need a lender's title insurance policy. This policy protects the bank from any unknown liens or judgments against the property.

Do you need title insurance on new construction?

In most cases, you should still purchase title insurance when buying new construction. Even though the building is new, the land is not. The land will have had at least one owner before you. In this case, title insurance will protect you and the lender against any potential defects in the title for the land.

How do you pay for title insurance?

Title insurance is typically paid for during closing. If you close with a title company in Pennsylvania, the fee for title insurance is often wrapped up in a closing fee that also includes the title search and the settlement fee. The fee for title insurance is a one-time charge.

Hopefully, these questions and answers have cleared up some of the queries you had about title services. If you're looking for a title company and an escrow agency, contact Heritage Land Transfer. With more than 30 years of experience, our award-winning team of professionals always put the clients' needs first. We partner with industry leaders and employ our own team of in-house attorneys to ensure a smooth, worry-free closing process.

This blog was originally posted on https://landtransfer.com/title-insurance-faqs-everything-you-should-know/