What are buyer closing costs and Prepaid's

What is the difference between buyer closing costs and pre-paid items?   The importance of knowing the difference between closing costs and prepaid items in Indiana offers to purchase a home.  

Dose it make a difference what the wording is in your offer when you ask the Seller to pay closing Costs when purchasing a home?

 It does make a difference, if you ask for $5000 in closing costs and don't include in the wording closing costs and pre-paid items in your offer some very expensive costs that relate to your closing are not covered. Your seller could net much more and you the buyer will be bringing possibly significantly more funds to the closing table.

Your Real Estate Agent needs to define what you want the seller to pay out of the amount you ask the seller to pay in closing costs.  Of course the buyer wants as many closing costs and prepaid items paid by the seller as possible.  So a good agent will try to use up all of the $5000 Seller has agreed to pay in Buyer closing costs so the buyer will have to bring as little funds as possible at the closing of your home.  

Recurring Fees -   also called Prepaid's and Escrows

Prepaid items are charges that aren't part of the mortgage process and fees not charged for the loan itself.  They are es-crowed items or amounts paid directly (such as the Home Owners Association) majority of pre paid items are paid per Diem to the date of closing or in the future per diem 6 months or one year from the date of closing. 

MORTGAGE INTEREST charged from the 1st of the month to the date of closing

PMI- Private mortgage Insurance  Government fee that is charged to do the loan

REAL ESTATE TAXES escrow 6 months - 

PROPERTY HAZARD INSURANCE  HOME OWNERS INSURANCE - 1 year escrow   Property hazard insurance is different then what home owners insurance is.  Property hazard protects the lender - Home Owner protects you

HOA DUES from closing to due date of Bill

 

 

 

NON RECURRING Closing costs items that are a one time fee A couple of fees are included only in certain circumstances or types of loans.

 

APPRAISAL

INSPECTION

CREDIT REPORT

DOC FEE

CLOSING FEE

LOAN CLOSING FEE

TITLE INSURANCE- owners policy protects the owner

TITLE INSURANCE- Buyers Policy

LENDERS POLICY Protects the Lender

RELEASE FEE

LENDER FEES including origination fee, discount points, under writing fee, processing fee, doc fee, document preparation fee, administrative fee,

FLOOD CERTIFICATION FEE

RECORDING FEE

TAX CERTIFICATE

RELEASE FEE

TAX SERVICE FEE

WIRE TRANSFER FEE

MOBILE NOTARY FEE

POWER OF ATTORNEY FEE

 

When you put in an offer its important that you know what your expectations are and they are met.  

A Seller doesn't have to accept your offer and may counter back with a lower amount in seller paid closing costs.  When the Seller does counter back and states they will only pay x amount in seller paid closing costs, your real estate agent if you agree needs to counter back and include the prepaid's and escrows with the closing costs or again the seller could be paying less then you expect and you may be paying more at closing then you expect.  

 

Shannon Thomas Real Estate Broker

Avon Indiana Real Estate Agent

 Love to List your home for Sale and Love to Represent you as a Buyers Agent

 

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