You've found a house at a price you can afford, and you've been approved for a loan.
You're almost a homeowner.
First, you have to get through closing, that ritual wherein you, the Buyer, sit across a conference table from the Seller and various other people, including an escrow officer from the title company, maybe the real estate agent who sold the house, an attorney or two, and maybe the builder if you're buying a new house.
What goes on in this meeting may seem like one of the great mysteries of home buying, but there's not a lot to it. You'll be asked to sign a lot of documents and hand over a hefty cashier's check to cover your closing costs. Then you'll be given a set of house keys and congratulated.
Nancy Mercer, a vice president at Stewart Title of Tampa, says most closings go smoothly, but there are pitfalls a home buyer should watch for.
"Escrow funds is one place where people can get real confused," Mercer said. "Basically, we're setting up an account for your real estate taxes to make sure that there's enough money to pay your land taxes when they come due in November."
One of the buyer's primary responsibilities before closing day is to get homeowners' insurance. It's crucial, Mercer said, to find out whether your new property is in a flood zone. If it is, you need a flood insurance policy.
"If they come to the closing table, and they've forgotten to get flood insurance, they might end up paying more money for it right then, or the whole closing could be delayed," she said.
A day or two before the closing, the title agent meets with the buyer (or sometimes with the builder or real estate agent, who will then pass the information on to the buyer) to tell them how much money they will have to pay at closing.
A cashier's check is almost always required for closing costs because title companies cannot accept personal checks for more than $500, and the average buyer's closing costs can be several thousand dollars.
Common charges the buyer is responsible for include a loan origination fee (1 or 2 percent of the amount of your loan); loan discount points (one point equals 1 percent of the loan amount); an appraisal fee and credit report fee (don't worry about this; you already paid it as part of the loan application fee); premiums for mortgage insurance, title insurance and homeowners insurance; escrow funds for county property taxes; a recording fee (about $10); documentary stamps on the mortgage ($100 or $200); survey fee (around $250) and termite inspection fee ($35-$50). The latter two are usually required by the lender.
As a rule of thumb, the buyer's closing costs usually amount to 5 to 7 percent of the total amount you're borrowing.
The sellers usually don't have to bring a big check to the closing table; the title company pays off their mortgage by taking that amount out of the sellers' proceeds. Finally, the buyer/new owner receives the recorded deed to the property and a title insurance policy.
Then _ finally _ you're a homeowner.