Escrow & Closing Costs
• A Resource For Buyers •
Closing costs are the fees for services, taxes, or special interest charges that accompany the purchase of a property. These may include title insurance, escrow fees, documentary fees, prepaid interest and/or property taxes, and any upfront loan points negotiated with the lender. Unless these charges are incorporated into the loan, they must be paid at the time of closing.
Who Pays?
Closing costs are paid by either the seller or the homebuyer. Oftentimes, it depends on the local custom and what the seller or buyer negotiates. For more on closing costs, request a copy of the "Consumers Guide To Mortgage Settlement Costs" from the Federal Reserve Bank of San Francisco. Call (415) 974-2000 or mail your inquiry to:
P.O. Box 7702
Attn: Public Information Department
San Francisco, CA 94120-7702
How Can I Save Money?
Studies have shown that closing costs, which average 2 to 3 percent of the purchase price, can be more costly than many buyers expect. But these are ways you can save:
1. Negotiate for the seller to pay all or part of the closing costs. NOTE: The lender must also agree to this;
2. Ask for seller financing, as this kind of arrangement usually does not entail traditional loan fees or charges;
3. Get a no-fee loan. However, the fees are often incorporated into a higher interest rate, but it can save on the amount of cash you need upfront;
4. Shop around for the best loan. Each lender or mortgage brokerage has their own fee structure. Search online, call around and inquire before submitting your loan application;
5. Consider renting the property of interest with an option to buy. This can give you more time to save for the upfront cash needed for the closing costs, including the downpayment;
6. Get a no-point loan. The trade-off is a higher interest rate on the loan, and some of these loans have prepayment penalties. Buyers that are short on cash and who can qualify for a higher interest rate, may find a no-point loan will cut their closing costs significantly.
Do I Need A Title Report?
While buyers often believe the best about properties of interest, a title report ensures that no liens have been placed against the prior owners. A preliminary title report gives the buyer an opportunity to review any impediments that could prevent a clear title from passing to the purchaser. When reading a preliminary title report, it is important to check the extent of your ownership rights or interests. The most common form of interest is "fee simple" or "fee," which is the highest type of interest an owner can have in land. Liens, restrictions, and interests of others excluded from title coverage will be listed numerically as exceptions in the report. You may have to consider interests of any third parties, such as easements granted by prior owners that limit use of the property. Some buyers attempt to clear these unwanted items prior to the purchase. A list of standard exceptions and exclusions not covered by the title insurance policy may be attached. This section includes items the buyer may wish to investigate further, such as any laws governing building and zoning.
BC Adobe Realty would love to assist you with the purchase of your Boulder City / Greater Las Vegas Area property. If you have any questions, please reach out to us by email or call (702) 293-1707.