What are closing costs?

TAMPA REAL ESTATE - What are closing costs and what does it have to do with purchasing a home?

The term closing is used for the specific time that a property title is transferred from the seller to the buyer and a mortgage is given by the buyer/borrower to the lender.

Purchasing a home is a thrilling time and the more you educate yourself about the process, the more you will understand what is happening at each step along the way.

Information should be available to you about closing costs connected with the purchase of your home. If you are using a home loan to buy the house, your lender has three days from the time of the loan application to give you a Good Faith Estimate of your loan costs.

When the seller agrees to your contract, closing starts. A key element to a smooth closing is good timing. A seller can look around to find a settlement agent to arrange documents for closing or your real estate agent can suggest someone for you.

Once the settlement agent has been agreed upon, they will take care of the closing process. If you have given the seller good faith money deposit, the settlement agent will make sure it is deposited into an escrow account where the money is held until closing.

Now the settlement agent will ask for the preliminary title work. A title expert will search and examine public records for clues connected to your home’s title. This search can lead to title problems that must be handled before the property can be transferred from seller to buyer. An example of this could be the previous owner being negligent in paying local or state taxes or an outstanding mortgage or judgment on the property.

Lastly the settlement agent will be ready to prepare the HUD-1 Settlement Statement. This item breaks down every closing cost for the buyer and seller.

When the actual closing day arrives, the property will be transferred from the seller to the buyer. Many documents to signed that the settlement agent will explain to you.

When all of the signing is done – you are a homeowner.

But components associated with closing will continue after the official closing. The settlement agent will send the payment to any prior lender, pay all entities who worked during the closing process, pay funds to the seller and execute a final search of the title to your new home before recording all the documents needed to legally complete the purchase.