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Category: Real Estate Law

Costs Involved In Title Services When Buying Real Estate

When it comes to conducting a real estate transaction one of the essential things to take into account are the closing costs. In general terms, closing costs are complementary costs as a result of the purchase or sale of the real estate. These are part of the negotiation and includes to the price of the property if you are buying a property or part of the expenses of the seller in the case of the sale of a house. A lot of factors will determine the closing costs. However, two significant factors will impact and define the amount of the same. These two factors are: if you will be buying or selling, and the second important factor is: if it is a purchase operation, if it is to be cash or if it is through a mortgage.

Closing costs when buying a property: Our example will assume that you will purchase a property at $ 300,000 with a loan (if any) of $ 200,000.

Loan Origination Fee

The fee that the bank charges to cover the costs of processing the loan. This cost varies depending on the institution. Their range of variation can be commonly between 1% and 3% of the loan amount. If we choose a 2% Origination Fee, in our example it would give us $ 4000. This cost is not applicable for the cash transaction.

Valuation (Appraisal)

The assessment of the value of the property you will purchase. The bank or the banking institution that is going to grant the loan will request this. The company authorized and licensed for this purpose will conduct the appraisal. The typical value of this item is between $ 400 and $ 500. If the transaction is cash, you don’t have to worry about this cost.

Credit Report

The bank that will provide the loan will request this report so that it can assess the history of the buyer’s credit behavior. Cost is typically not more than $30. Not applicable if the purchase is in CASH.

Title Search

Charge for examining public records to research the title and determine if there errors in the title. This will also confirm the owner’s rights to the property. It is crucial that the real estate attorney who will conduct the analysis is expert with the law to avoid future issues. This cost typically ranges from $ 100 to $ 250.

Search encumbrances (Lien Search)

The search will determine if the property has any liens, lawsuits, or open permits that could affect the future owner of the property. Look for attorneys title services who are meticulous in searching for the title’s history. This cost typically ranges from $ 250 to $ 300.

Ground Survey (Survey Fee)

This item does not apply to the purchase of a condominium. The survey serves to test the limits and dimensions of the property. This survey cost around $400, and you can skip the survey in Florida.

Correspondence (Courier Fee)

These are the costs for expediting the sending of documents quickly. Typically it’s about $30.

Title insurance for the buyer

This policy protects the buyer from problems or errors arising in the title before buying it. There is a chance that some issues were overlooked during the Title Search and the insurance will cover for such lapses. Unlike most insurance, this policy is paid only once. The cost is generally around 1% of the transaction price. In our example, the cost would be to $3000.

Title Insurance for the Lender

This policy is similar to the one above but protects the lender. Their cost is usually typically the same percentage as owner’s policy. However, instead of paying for the whole transaction amount, the fee will be based on the loan amount.

Title company fee (Closing Fees)

Title companies are independent private businesses that are in charge of the whole process of closing the deal. The tasks of the company are multiple, and the main ones include:

  • Requesting and analyzing the Title Search and the Lien Search. Ensure that all debts that may affect the real estate, such as mortgages, taxes, payments to associations or pending condominiums are paid.
  • Have the necessary documents registered such as securities and mortgages.
  • It will handle the purchase of insurance for the title and the lender.
  • It will take care of receiving the money collected in the transaction and make the necessary disbursements to the parties involved, payments to the private or public entities, etc.

The closing costs vary widely from company to company, but in general terms, they can be between $ 600 and $ 1200.

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f you want to know how much would be an estimate of the total closing costs based on the price, it will vary if you will pay using cash or mortgage. If the purchase is through cash, the closing costs will be between 1.5% and 3.5% of the price of the transaction. However, if the purchase is financed, we can say that the closing costs will be between 5% and 6% of the total price.

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Checklist For First Time Home Buyers

While it is true that buying a new property is exciting, it can be terrifying as well. There are some things that you need to do for you to identify a property that you can afford. You are able to identify if you are financially ready to get that property and can plan ahead to ensure funding.

Due to the difficulty of finalizing to get a new property, you sometimes prefer to rent a house forever than buying. On the other hand, it is really worth the time getting yourself be familiar with the process of buying a new property. Getting a new property or home is a feeling of personal stability and investment. To make the process smooth and easy, below is a checklist for you to consider first before buying.

Visualize your financial ability

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Planning ahead and take the time to review your financial capacity is very crucial. Though you are not into getting a loan or any kind of financial assistance, you should always be prepared to list down your current financial status because this has to be submitted to the mortgage agent. You should be aware of the requirements in buying a new home. You are tasked to provide all your current job information and all other questions related to your financial stability and readiness to pay the property.

Identify how much you can afford

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Aside from explaining your current financial status, you should be able to identify how much you can really afford to buy. This is very important to make sure that you are able to get what you can exactly pay without experiencing any financial difficulties in the future. With this, you have to understand first your scope, then look for a suitable place. This must be done because it will benefit you in the long run. When you are able to do this, you are assured to have a smooth flow of your budgeting while getting a new home.

Know where you stand with your credit

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Before you begin searching for a financial assistance, you have to know your current standing with your credit. When asking your credit reports from different agencies, the results vary but if the majority of the result of your credit is good then that is great. If not, start repairing first before finally deciding to buy a new home. Plan how long you will clear up your credit. You can give yourself a year to pay everything so that you can establish a record of responsibility. With this, your loan options may give you a better opportunity to borrow a higher amount.

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