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Closing Costs AZ Guide
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Title Insurance Costs
A big part of doing your due diligence will be making certain that all
government records have been searched and found relative to no one else
having, or making a legal claim, or placing a lien on, the property in
question. Once this task has been done title insurance may be issued.
Title insurance binders and insurance policies are also required before
the deal is consummated. These can carry separate and independent fees
or they can be lumped together. The lender will wish to protect himself
and so he requires the insurance policy to be issued and you should also
consider doing the same on your own behalf.
Attorney's Fees Are Unavoidable Most of the Time
Some locals will require for an attorney to become involved by contributing
to the title process and a few other aspects of your new home's acquisition.
Unless you are tax exempt, for some reason or another, all locals require
the annual payment of property taxes. You may be asked to pay a prorated
share of the year's taxes with the home seller if you have purchased a
home in the middle of the year.
City, County and State Charges Are Also Unavoidable
There will most certainly be local taxes and fees for the processing and
notarization of documents assessed by the local municipality, county or
state where this is all taking place. The local governments where you
live may charge taxes and fees to record and stamp documents such as deeds
and loan paperwork.
Let's Not Forget the Surveyor
Back to due diligence; you must be certain, as with an appraisal for the
value of the home, exactly how large your property is, exactly where it
is located, whether or not there are accesses granted to public utility
companies and finally, if your neighbors hold the boundaries in dispute.
Environmental and Pest Inspection Considerations
Some municipalities require that an environmental inspection of the property
and premises be conducted. This is in your favor and if not required you
should seriously consider having them done anyway. You will need to determine
if the property is safe to inhabit. Are their gas or chemical emissions
coming from the ground? Is the water, if there is a well, pond or lake,
or stream or river running through it, contaminated. You may also wish
to check the local water supply, where it enters your premises, if you
are on a municipal system. Is the structure free of pests, termites and
rodents? So, now you should understand the importance of having environmental
testing conducted as well.
If an appraiser notices signs your home may have termites or other pests,
or if the laws in your area require it, a pest inspection and report must
be done. Fees for these services are included in closing costs.
Last, But Not Least, the Flood Check Fee
The lender, to determine if you will require insurance for a possible
flood, must scrutinize Federal Flood Maps. The map search and issuing
a certificate should be included in the process and resulting charges.
Lenders Will Require Certain Prepaid Amounts
Prior to your first payments being due after you have secured your loan
their are costs that will need to be paid up front. These "prepaid" costs
will be accessed and due on the day you refinance or purchase that new
Here is the list of the prepaids that you will need to include:
When the loan is finalized before the last
day of the month, at closing you must prepay interest on the loan for
that interim time between the day the loan was funded and the first day
of the upcoming month.
Homeowners' Insurance Premium
You must also pay, at closing, one years insurance to cover any possible
damages. This protects both you and the lender.
Private Mortgage Insurance
To further protect them, in the unfortunate event that a borrower does
not repay his loan, some lenders require Private Mortgage Insurance (PMI),
if the down payment was less than 20%.
Reserve or Escrow or Impound Account
Not always required, but they can be a consideration, are escrow, reserve,
or impound accounts. These types of accounts are opened on your behalf
to facilitate the payment of the first two months taxes and insurance
premiums. You will most probably be expected to fund this account at the
time of the closing. Then the lender will be able to pay these costs for
you when they come due. Money for this account is included in your monthly
mortgage payment. Again, this is not necessarily a requirement that you
will have to consider, so ask.