What is a Mortgage Settlement Fee?
The mortgage settlement process
The Mortgage Settlement process also known as a ‘mortgage closing’, can be a confusing pat of a real estate transaction for many people who have not been involved with purchasing real estate before. This can also be true with those not current with the changes that effect the ever-evolving mortgage market.
The final arrangement can involve more than one of the interested parties, concerning what a buyer will pay for such items such as closing costs & mortgage fees. Often times there are a variety documents necessary to complete this process & it is very important to understand what you are signing. Understanding the steps that are involved, can make attaining a successful mortgage settlement a relatively painless process.
Even though this article focuses on mortgage settlements for purchasing a home, much of what is discussed here applies to refinancing a mortgage; as well.
The costs involved in mortgage settlement can be high, so don’t be afraid to ‘shop-around’ for a mortgage lender, real estate attorney or mortgage settlement agent who offer mortgage settlement services as other ways to keep costs down. Paying less for a mortgage settlement, means more money in your pocket for the other usually unforeseen things associated with home buying.
Make sure to check out whether there are any regional mortgage settlement practices & customs in your particular area, since these can vary from state to state & in different counties. This can be an apply when negotiating which party will be paying the mortgage settlement fees.
When the real estate market is slow-moving, things may work to the buyer’s advantage in terms of what can be negotiated. For example, this may include costs that are usually assumed by the buyer; such as mortgage settlement costs (including points), & any mortgage fees. Conversely, the opposite is true in a fast-moving market. In fact the buyer, if he or she is serious about purchasing a property, & especially if the property in question is in demand; possibly with multiple offers; in order to close the deal. A buyer may actually have to ‘sweeten their offer’ by agreeing to pay more of the costs using creative incentives for the seller to grant them the sale.
Make sure that you get everything you are negotiating in writing, since it will be included as part of the basis of the sales contract. It is important to be aware that a seller may want to recover these costs, & often will do so by increasing the selling price of the property.
There are ways to better your chances of saving money with regards to mortgage settlement…if you are well-informed about the process works & use it to your advantage.
To determine what an estimate will be for a mortgage settlement, remember that based on your location; it may vary significantly. Getting a reliable estimate for may not be that easy; however; a ‘rule-of-thumb’ that can be an effective way to be able to plan for these costs is to calculate that it will be approximately 3% of the purchase price. This can be higher, in certain areas of the country, where the tax rates are higher; 5% to 6% is not uncommon.
Lastly, there are other factors that can affect the different aspects included in some of the additional mortgage settlement costs that you may encounter. Factors like having a low credit rating, can make private mortgage insurance, homeowner’s insurance, or ‘points’; more expensive. It is a very good idea to know your credit score, since it is one way that mortgage lenders view & evaluate your mortgage application & how it will impact your mortgage loan & ultimately a way for you to anticipate the costs associated with your mortgage settlement. As part of the mortgage settlement process, mortgage lenders are required to furnish you with a copy of your credit score; so be sure to get a copy of it…the sooner you get one the better.Sharing is caring:
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