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Frequently Asked Questions
What are closing costs?
Closing costs are an accumulation of charges
paid to different entities associated with the
buying and selling of real estate. For buyers,
they are usually about 4-6% of the total sales
price of a property. Some of the closing costs
you might encounter are: application fees,
appraisal fee, county taxes, credit report,
discount points, documentation fee, escrow fees,
homeowners' association fees, loan fees,
mortgage insurance, origination fees, tax
registration and title insurance premium.
What is a point?
One point is equal to 1% of the new loan amount.
Whenever government regulation, state usury laws
and/or competitive practices prohibit the lender
from charging a rate of interest that would make
the real estate loan competitive with other
fields of investments, the lender must seek some
method of increasing the yield for the
investors. By charging "points", the lender can
bring the real estate loan up to those other
investments.
What is earnest money?
When you make an offer, you will need to put up
an earnest money deposit as a sign of good faith
that you are seriously interested in buying a
home. That deposit becomes a part of the
purchase price and is held in a trust account
until there is full acceptance of the offer.
Typically, an earnest money is 1-5% of the offer
amount.
What is title insurance?
Title insurance protects the named insured
against loss because of defects, liens,
encumbrances, adverse claims or other matters
not shown or disclosed to the new owner that
attach before date of policy.
Is VA or FHA financing unfair to sellers?
FHA and VA loans provide purchasers the
opportunity to buy homes with minimal cash
investment and at lower interest rates. The
result is a larger market for sellers, who also
benefit by receiving all cash for their equity.
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