he lender must disclose a good faith estimate of all settlement costs,
which will have to be brought to closing, most commonly in the form of
a cashier's check.  The title company or other entity conducting the closing
will tell you the required amount for:
  • Downpayment
  • Loan origination fees
  • Points, or loan discount fees you pay to receive
     a lower interest rate
  • Appraisal fee
  • Credit report
  • Private mortgage insurance premium
  • Insurance escrow for homeowners insurance, if
     being paid as part of your mortgage
  • Property tax escrow, if being paid as part of the
     mortgage.  Lenders keep funds for taxes and
     insurance in escrow accounts as they are paid
     with the mortgage, then pay the insurance and taxes for
     you when they are due.
  • Deed recording fees
  • Title insurance policy premiums
  • Survey
  • Inspection fees - building inspection, termites, etc.
  • Notary fees
  • Prorations for your share of costs such as utility bills and property taxes

A Note About Prorations:
Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved.  Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance.  For example, the gas company usually sends a bill each month for the gas used during the previous month.  But assume you buy the home on the 6th of the month.  The seller would owe for the first 5 days.  The bill would be prorated according to the number of days in the month, and then each person would be responsible for the days of his/her ownership.




  • The Real Estate Settlement Procedures Act (RESPA) statement.  This form, sometimes
     called a HUD 1 statement, itemizes all the costs associated with the closing.  You'll need
     this for income tax purposes and also for when you go to resell the home.
  • The Truth in Lending Statement.  This summarizes the terms of you mortgage loan.
  • The mortgage and the note (two pieces of paper).  These spell out the legal terms of
     your mortgage obligation and the agreed-upon repayment terms.
  • The deed.  This transfers ownership of the property to you.
  • Affidavits swearing to various statements by either party.  For example, the sellers often
     sign an affidavit stating that they have not incurred any liens on the property.
  • Riders, which are amendments to the sales contract that affect your rights.  For example,
     if you buy a condominium, you may have a rider outline the codo association's rules
     and restrictions.
  • Insurance policies.  These are needed to prove that you have coverage on your new
     property.

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