Interest- "Per Diem"
(per day) interest on the new loan from the date of settlement to
the end of the month in which the loan closes.
Mortgage Insurance Premium- Most lenders require mortgage
insurance on conventional loans which exceed 80% of the purchase
price or the appraised value, whichever is less. This insurance,
paid by the buyer, protects the lender against loss if the buyer
defaults on the loan. Lender’s requirements vary. The lender should
inform the buyer at the time of the loan application whether
mortgage insurance will be necessary.
Hazard Insurance Premium- The hazard (homeowner’s)
insurance premium, if not already paid, is collected at settlement.
The buyer should contact the lender for specific requirements
concerning policy coverage prior to settlement.
Reserves
Deposited with Lender
Insurance, Taxes, Assessment- Funds to cover these items
are collected in advance from the buyer and held by the lender in an
account to pay future obligations as they become due. This is
referred to as an escrow. The amounts collected at settlement depend
on the number of monthly payments to be made between settlement and
the date each charge is due. With recent changes made by the
Maryland legislature, taxes will be paid biannually starting in the
year 2000. This should reduce the number of months taxes will be
escrowed.
Title Charges
1101. Settlement or Closing Fee- A charge for conducting
the settlement.
1102-1103. Abstract or Title Search and Title Examination-
This includes the fee for performing the necessary research of the
land records in the jurisdiction where the property is located, in
order to establish the seller’s right to convey the property to the
buyer. Maryland law requires the abstractor to go back 60 years to
verify ownership as well as easements, rights of ways and other
matters which could affect the title.
1104. Title Insurance Binder- A fee for issuing title
insurance commitments protecting botht he lender and the buyer. The
final policies are issued after the transfer documents have been
recorded.
105. Document Preparation- The title company’s fees for
preparation of the Deed, Deed of Trust or Mortgage, and other
related documents.
106. Notary Fees- Fee for notarization of documents,
usually paid by the buyer.
107. Attorney Fees- A fee charged for services provided
over and above the customary services included in the title
examination fee. These might include fees for preparation of
additional document required at closing, such as a power of
attorney, subordination agreement etc.
108. Title Insurance- This is a one-time premium, paid at
settlement, protecting the buyer and the lender against other claims
of ownership as a result of forgeries, recording errors, or other
title problems. A policy insuring the lender is required; a second
policy protecting the buyer’s equity is optional but highly
recommended. If a competing claim to title is found valid the title
company guarantees against loss to the extent of the purchase price
of the property, plus inflation factors, if an owner’s policy is
purchased.
111. Copies- A charge to the buyer for the cost of copies
obtained from the land records.
112. Judgement Report- A judgement report is done to
determine if any owners of the property within the last 12 years had
judgements entered against them.
113. Payoff and Release of Mortgage- A charge to the
seller for obtaining mortgage payoff figures and the release of
mortgage from the lender.
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