Buying your first home is an exciting time, and it's easy to get lost in all of the real estate jargon. Understanding key terms, such as closing costs, is essential so that you know what's going on and can prepare for the process correctly. Below are a few of the most important terms that will help you streamline the process and get the best results.
Terms First-Time Homebuyers Need to Know
1. Closing Costs
Closing costs are expenses that you'll have to cover at the end of the home-buying process. These are generally 2%-5% of the home's sale price, and the terms will be provided in the closing disclosure that your mortgage lender shares with you before you buy. Standard closing costs include lender processing fees, fees for transferring the title, legal fees, and prepaid costs to cover property taxes.
2. Title Insurance
Owners Title insurance protects the homebuyer and Lenders Title Insurance protects the lender from any damages caused by existing issues with a home's title. This includes liens, title defects, or previous conflicts of ownership. If there are outstanding lawsuits, forgeries on the title, or blemishes on the record, title insurance will protect you and the mortgage lender until the issues are sorted out.
When a home is in escrow, it means that you've submitted payment to an impartial third-party who will hold it on your behalf until the deal is finalized. This ensures money can't be withheld, held hostage, or be misused by either party.
The lender may also hold money in escrow to cover prepaid expenses, like homeowners' insurance and property taxes. This is to ensure that these are always paid in full and on time.
4. Round Table Closing
With escrow, money is delivered without anyone having to meet in person. Round table closings are the opposite. The buyer, seller, real estate agent, sometimes the lender, and other parties are present to pay for the home and complete execution of documents necessary to transfer title and execute the mortgage for the Lender, if applicable. This gives you opportunities to work out last-minute details or outstanding issues for the transaction providing these items were not addressed in your purchase contract.
5. Home Inspection
You want to know what you're purchasing, which is why scheduling a home inspection is a must. Home inspectors carefully look at all aspects of the home ranging from the electrical and plumbing to the kitchen cabinets and doorknobs. They'll look for mold, pests, signs of past water or fire damage, a weakened foundation, and anything else that could devalue the home. You can then use this information to negotiate a lower sale price if relevant.
If you need assistance navigating closing costs and real estate transactions, the team at All Points Title & Closing can help. They've served residents of Hamilton, OH, since 1986 and offer comprehensive title insurance. This title agency will carefully assess your needs and then work closely with you to find the best coverage. Visit their website to learn more about their services and call (513) 863-7600 today to schedule a consultation. You can receive more tips and updates by following their Facebook page.