October 9, 2019
So you’ve been pre-approved, and your bid on the perfect house for you and your family has been accepted. You have your down payment. Everything is in place for the final step— it’s time to close. But what exactly does closing entail? In short, some legal things and a whole lot of money.
Fees, Fees, Fees
During closing, you and your real estate agent will meet with a representative of the escrow company that’s handling your loan. You will sign a large stack of documents and write a few checks. Here’s a list of the typical closing fees that you and the seller will pay at the closing:
• Credit report
• Title search
• Recording fees
• Courier fees
• Loan origination fee
• Discount points
• Your portion of the escrow services
The Seller’s Fees
• The seller’s portion of escrow services
• Title insurance
• Excise tax
• Recording fees
• Real estate commissions
As part of your Purchase and Sale Agreement, you can ask the seller to pay your closing costs and prepaid items. Please be aware that lenders may have a limit on the amount of a buyer’s closing costs a seller can pay—typically 3% to 9% of the sales price, depending on the loan to value.
While it’s not always the case, here is some other information that may be required at closing:
• Water and sewer certification if your new home is not on municipal and sewer facilities
• Building code compliance letter
• Private mortgage insurance (PMI)
Be sure you understand the loan documents you sign. Your mortgage lender should explain all of the documents you sign at the closing. Make sure you understand what kind of loan you’re getting, what the payments will be from beginning to end, how much interest you’re paying and whether you’ll have a fixed interest rate or if it will be fixed for a limited time before becoming variable. Once the title is recorded, ownership will transfer to you. Congratulations! You are now officially a Louisiana homeowner.
What’s an Escrow Account and Do I Need One?
Escrow accounts, a means to protect people from losing their homes, were established during the Great
Depression to help unemployed Americans pay their property taxes. An extra payment was attached to their monthly mortgage payment. It was hard enough to come up with the money to pay for food and clothing in those days, much less a large tax payment. Escrow accounts held that money in reserve until it was time to pay taxes.
Today, the accounts also are used for insurance payments so that houses are covered in the event of fires, floods and other hazards. Homeowners today are protected from the possibility of losing their homes for missing tax payments, but your lender may require an escrow account to cover any unexpected increase in tax or insurance payments.
Signed, Sealed, Owned
And that’s that. Once you’ve completed the closing process, you will be a bonafide Louisiana homeowner! If you have any questions about mortgage lending or getting the best loan for your home, contact us today. A La Capitol representative can walk you through the mortgage application process and help you find a solution that works for you.
We make loans to qualified creditworthy members. Equal housing lender. NMLS #411413.