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Seller Cost Net Sheet

In the first part, we've talked about the basics of home closing, including what closing on a home means, what happens during this transaction, which parties are present, and what closing documents will be evaluated.

What Are The Closing Costs?

Take a deep breath and stop worrying about closing costs. Just like the rest of the procedure, you should be cautious and patient as you go over your debt. Any charges the buyer incurs when buying a new house are considered closing costs. These are the costs associated with completing the buyer's title transfer and starting the mortgage loan, and they are billed to the buyer by the lender and title business.

It's crucial to remember that various expenses are required to be listed in the closing disclosure, depending on what your lender needs. 

Here are some common closing costs:

Loan Origination Costs: This is an application processing fee that the lender charges you in advance.

Land Survey Fee: To ensure that the lender is funding the property appropriately, a land surveyor will confirm the borders.

Inspection Fees: These are any costs collected by the buyer in employing experts to examine the subject property. Lenders typically mandate preventative inspections. For additional information on inspections, see our closing checklist below.

Credit Checks: The lender will charge you for any costs incurred in assessing your creditworthiness as a buyer. This could lower your credit score, so before applying for a loan, you might want to speak with a financial expert to find out how your credit is doing.

Mortgage Points: These are credits that you can buy to reduce the effective interest rate you'll pay on your loan. They are also sometimes referred to as discount points.

How Much Does Closing Costs Cost?

Closing expenses depend on your location, the lender you chose, and any third-party suppliers you shop around for before the title transfer -- just like most other steps in the process.

One of the biggest factors influencing total closing costs will likely be the state or area in which you are buying a property, as this will have a significant impact on the projected cost of each itemized closing expense. 

2019 closing costs in Washington, D.C. ranked among the highest average prices of house sales among U.S. states and municipalities, exceeding $25,000 on average. This is a staggering 1,351 percent increase over the average expenditures associated with closing on a home in Indiana.

How To Reduce Closing Costs?

Location plays a huge role in closing costs; however, there are ways to keep these expenses as low as possible.

Create A Budget Plan

To evaluate your capacity to make monthly payments, the lender will require you to provide proof of all the debts you owe. This will be used to know your debt-to-income ratio, which should be less than 43 percent to increase your chances of approval. Setting up a budget for your house mortgage payment lowers the chance that you'll apply for a loan you can't afford over time and makes it more likely that your lender will consider you a reliable borrower.

man reducing closing costs using calculator

Check Your Credit Score

Lenders may find that borrowers with high credit scores—typically 740+—are among the most desirable candidates since they may have a history of more responsible loan payback. Even though you can still get a loan with a lower credit score, if your lender thinks you're a bigger risk, you might have to pay thousands more in interest!

Choose The Right Third-Party Supplier

You may afford to spend less for these necessary expenses upfront if you shop around for house inspectors, insurance companies, value appraisers, land surveyors, and anybody else you'd depend on to thoroughly assess your property and assist you in finishing. Recall that even if your lender could suggest a particular third-party vendor, it is still your call if you want it.

How Long Does Closing A Home Take?

There are different variables affecting the length of the closing procedure. On average, it takes up to two months, depending on all the circumstances.

The length of time it takes to close on a house depends on certain factors that are beyond your control as a buyer, such as how long it takes your lender to process your application, but you may also speed up or slow down the process by making certain decisions. You might expect your closure to go faster if you give it more time to prepare. 

Here are two tips to close on a home quickly:

Work With An Attorney: The closing procedure might run smoother and faster when you have experts on your side.

Ask Referrals For Inspectors: The experts you're working with are not only able to recommend repairs faster; they may also be able to suggest contractors for those repairs who can complete them promptly.

Checklist For House Closing

By now, you may already know how much time, money, and energy a house closing needs. Yes, it's complicated, but knowing what to prepare ahead of time can make closing on a home faster and easier. 

Below is a checklist of things you need to get ready for house closing.

Create An Escrow Account

Opening an escrow account to handle any closing transactions might be a good first step toward protecting your money from fraudulent behavior, even if it's not required by law in every state. 

A third party holds the account that the buyer finances concerning the itemized total that is agreed upon in the closing disclosure form. Escrow accounts are run independently from both the seller and the buyer.

Perform A Property Title Search

By looking up public records to see if anyone else is claiming any portion of the land you want to buy, you may confirm that the title to the property is uncontested. When there are no liens or encumbrances on the property, no evidence of fraud or forgery is found, and no third party is connected to the ownership of the property in any manner, the title is considered clear.

Work With An Attorney

Hiring an attorney might not be required in some areas; however, that doesn't mean you should skip this stage. Having a lawyer who is an expert in real estate and mortgage rules in your state can help you save a lot of money when negotiating closing fees while reducing possible stress and problems along the way.

Evaluate Home Repairs

Finding the help you need is one thing; looking for the right third-party supplier is another. That's why when you seek a home and pest inspector, you should not just hire anyone. 

Hiring the right inspector can help find difficult-to-reach damage from a prior earthquake, fire, or flood that needs to be fixed. Lenders frequently even demand that repairs be evaluated and completed before closing.

Do A Final Walkthrough

It's almost a done deal now, but before anything else, don't forget to do a final walkthrough.

Before the formal closing and title transfer, this is the next-to-the-last phase in the procedure. After the inspections and, hopefully, the repairs, you have to double-check that the home's value justifies what you're going to pay for. 

Pro Tip: When doing a final walkthrough, check everything to make sure that they're working well, such as every light switch, toilet flush, faucet, appliance, and even every door knob. List down any minor damages you can see and you can either reduce them from the home's value or ask them to be fixed right away.

Complete Your Closing Documents

Now that you're moving forward with the settlement, the next thing you need to do is get all the essential documents ready, such as:

Proof of funds for the transaction, such as a cashier's check or wire transfer receipt

Closing disclosure (to be compared to the estimated loan amount)

Access your bank account via a checkbook or smartphone 

Finally, remember to invite your lawyer (or a friend or trusted advisor) to the closing.

Despite the complicated nature of closing on a house, there are resources and services available to ensure a seamless transaction. Making the best decisions for your lifestyle when selecting vendors is one of the many things you can control, and it will provide you peace of mind as you wait to move into your new house.

If you want to learn more about closing on a home or need help with the title, our team at IndyLegal is here to help!

Click this link to see informative resources or call us at 317-214-6023 so we can assist you today!

Closing expenses are inevitable when purchasing a new house. According to a poll by ClosingCorp, the average closing cost for a single-family house rose 13.4% to $6,905 in 2021. That increases to $10,765 when taxes are included.

There are ways to reduce some of the upfront closing costs that homebuyers must pay, even if the days of no-closing-cost mortgages are long gone. To achieve that, borrowers must first be aware of the costs they would incur.

What Are The Types Of Closing Fees?

There are several sources and sizes of closing costs. The costs that the lender imposes are one thing, but homeowners also have to pay state and federal taxes. The biggest potential savings can be found in the lender fees, which vary from one bank or mortgage broker to another. The negotiation of items like city, county, and state transfer taxes, prepaid property taxes, and recording costs, on the other hand, is minimal to nonexistent.

Below are some of the most common expenses involved in closing a home:

Additionally, a borrower may buy points to reduce the interest rate during the mortgage loan. The number of closing expenses a buyer will be required to pay is determined by the financial institution, the mortgage-related fees it levies, the state in which the property is located, and the cost of the loan.

How To Save on Closing Costs

There are a lot of fees involved in closing, but don't worry. There are ways how to cut down those costs, and here are some:

Shop Around

There is a lot of money at stake with closing charges, making this a valid reason to look around for the lender with the lowest closing charges. 

You can ask the loan provider to match any other lender's reduced closing cost offer. Other than getting estimates from several lenders, you can also get quotes for other services. You are free to compare prices for certain of the closing costs services, such as the title search, the survey fee, and the pest inspection fee. In other words, you don't have to choose the supplier your lender recommends; instead, you can look for a better deal elsewhere. 

Long story short, shop around and compare before signing up for anything.

Evaluate The Loan Estimate

Don't just scan the Loan Estimate when you receive it. Discuss each item in detail with the lender, asking what each fee covers and why it costs what it does. This is an effective approach to spot inflated or pointless fees. Additionally, watch out for fees with names that are similar because the lender can be charging twice for the same service if they are. Processing and underwriting fees are two such examples. The lender might be transparent about the closing fees, but it's still important to carefully check your Loan Estimate.

Negotiate Closing Costs With the Lender

You can begin negotiating once you have a clear understanding of the costs the lender is asking you to pay. If there are unknown charges involved, ask the lender to reduce them from the total price.

When it becomes available, request that your lender provide you with the Closing Disclosure form, which includes information about your final closing expenses. Compare the Closing Disclosure to the Loan Estimate and get an explanation from your lender if there are any differences.

agent holding pen asking home buyer to sign up loan agreement

What Fees Are Negotiable?

When you negotiate closing costs, it makes sense to know which ones are negotiable and which fees are set in stone first. 

For instance, loan origination fee. This is given to the loan officer or mortgage broker as a commission for introducing the client to the bank or lending organization. You can ask your lender if any components of the origination charge can be waived, such as the application or processing fees, to reduce it. Ask your lender if they will include application and processing fees in the loan origination fees; some lenders won't. Additionally, lenders are required to give you a list of closing costs beforehand so you may decide which are affordable.

Verifying that the home is both worth the asking price and belongs to the individual who claims ownership is a requirement for mortgage approval. The cost of that is passed on to the borrower because it requires some due diligence on the part of the mortgage provider. A title search, an appraisal, and a house inspection are costs associated with mortgages. Title insurance is also required by the borrower and is frequently obtained through the bank's preferred insurer.

These are just some of the things that you need to consider when negotiating closing costs. To find the best options for you, our team at Indy Legal can assist you. 

Just click this link or give us a call at 317-214-6023 to get started.

8315 W. 10th Street
Indianapolis IN 46234
317-214-6023

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