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ltlkoala

Need Explanation, Please!

ltlkoala
14 years ago

At the risk of sounding totally obtuse:

Are closing costs different from down payment.

When my contract says I have a certain sum of money due at closing, does that mean it includes both closing and down? In other words, contract has:

Purchase price + est closing costs + est reserve/prepaid costs + FHA/FGMIP/VA fee=Total Costs - loan amt - nonborrower closing costs- FMA UFMIP/VA fee financed. Then I have a cash from borrower. Does this cash from borrower include both down and closing?

Sorry for sounding like an idiot!

Thanks so much for any advice!

Comments (8)

  • worthy
    14 years ago

    Are closing costs different from down payment.[?]

    Yes. And not a dumb question at all!

    The downpayment is the amount that goes to the Seller. The rest are assorted fees, some of which you noted above, that go to intermediaries such as lenders, insurers, lawyers, mortgage brokers, taxes.

    Closing costs that buyers sometimes overlook are: adjustments for realty taxes--as when the seller has paid property taxes in advance; utility set-up fees, such as a hefty deposit if you have not had accounts with the utility supplier before; property and liability insurance; condo and home association fees; security monitoring fees (sometimes a year in advance.)

  • jane__ny
    14 years ago

    Our house is under contract due to close end of Feb. Our homeowners insurance is due this month. Do sellers get that back after closing?

    Jane

  • C Marlin
    14 years ago

    Yes, cancel it after you close. You can send them a copy of your closing to confirm the date you lost your interest, you will get the prorated return premium..
    Your buyer will get a new separate policy.

  • sylviatexas1
    14 years ago

    Buyer's Closing:

    The down payment goes to the lender;
    the only time it would go to the seller would be if the property is owner-financed.
    The closing costs go to various entities:
    appraiser if he/she hasn't been paid already,
    title company for their escrow fee,
    mortgage company for their various fees,
    insurance company,
    etc.

    Seller:
    The seller gets the net that's left over from the purchase price after deducting his/her costs:
    pay-off of his/her mortgage
    escrow fee
    Realtor fee
    pro-rated taxes
    recording fees
    etc.

    To get a clearer picture, you might ask your title or escrow company to make up a trial closing statement & to go over it with you.

    The closing statement, also called a "HUD-1", are something like bank statements;
    they have credits & debits & show the bottom line;
    for sellers, it's what they take home, for buyers, it's what you shell out in certified funds at the closing table.

  • jane__ny
    14 years ago

    Thanks, cmarlin! You made my day. Very annoying to have to pay out so much money because the buyers want a long closing date.

    Jane

  • Carol_from_ny
    14 years ago

    When you sit down to do the actual closing do yourself a favor and double check any and all math done. Do NOT for one second believe because you are dealing with pros that they don't make mistakes. If you get a different number or don't understand where they got a number from don't just skip forward ASK for them to explain to your satisfaction where that number came from.
    READ BEFORE YOU sign off on anything.

  • sweeby
    14 years ago

    "When you sit down to do the actual closing do yourself a favor and double check any and all math done. Do NOT for one second believe because you are dealing with pros that they don't make mistakes."

    Good point!

    When we bought the house before this one, the builders included costs for some upgrades that weren't done, and mispriced several others. Good thing I had my notes with me! The folks at the title company tried to smooth things over and say we didn't have time to recalculate everything and regenerate the paperwork. But when I said we'd need to reschedule then and got up to leave, they suddenly got faster computers...

    And when we bought this house, all the paperwork was in my name and the name of my then-5 year old son instead of my husband. (Hubby has a name that's common for kids and rare in adults; Sonny has a name that's common in adults and much less so in kids.) They too tried to explain that it would take too long -- until it became clear we would NOT sign the faulty paperwork. Again, 30 minutes or so to fix. (Of course, they filed the wrong version, then tried to charge me to fix it...)

  • C Marlin
    14 years ago

    In recent transactions we've had all the docs emailed to us so we could review (and correct) them before the day of signing. Try to do that.