L14: Real Estate Computations And Closing Flashcards
Final walk-through
Aka, pre-closing inspection
- tends to be done 1 week prior to closing up to day of
- goal is to make sure the property’s condition hasn’t changed and that the agreed upon terms have been met by seller
Closing
- closing is the consummation of the real estate transaction
- the title to the real estate is transferred from seller to buyer
- conducted by a closing agent (in FL usually title company or attorney)
- most transactions will close in escrow (funds held by a third party on behalf of buyer and seller and disbursed when title is acceptable).
Ways to remedy issues found during the walk-through (3)
- Terminate the contract
- Delay the closing (in order for seller to fix the issue)
- Negotiate a concession
Buyer’s Deposit
- documents deposited by buyer in escrow prior to closing
- balance of cash needed to complete purchase (cashiers check)
- loan document (if securing loan)
- hazard insurance policy
- survey (if requested by lender)
- other documents (ex.appraisal)
Closing Disclosure
It’s the final itemization of all services and fees charged to the borrower by the lender when applying for a loan
– it’s a RESPA/TILA form that must be given minimum 3 days prior to closing
– includes:
- loan terms
- projected payments
- closing cost details
- calculating cash to close
Seller’s Deposit
Documents deposited in escrow prior to closing:
- deed conveying property to buyer
- title evidence
- payoff letter or estoppel certificate
- affidavits of title
- affidavits as to debts and liens
- other needed documents
Closing Documents (8)
A) sales contract (has all necessary info on transaction)
B) deed (legal dock the transfers title ownership) or mortgage documents
C) Survey
D) property inspection
E) homeowners insurance (lender requirement)
F) bill of sale (if personal property is being transferred)
G) IRS form 1099-S
H) Condo & co-ops documents (if applicable, see level 8)
Typical seller’s closing costs
- their attorney’s fees
– broker’s commission - condo or co-op fees (due/past due)
– deed transfer tax (negotiable between parties)
– recording expenses related to cleaning defects from title
– satisfying existing liens
– title expenses
Typical buyer’s closing costs
- appraisal fees – own attorney fees – condo/co-op fees – deed transfer tax (negotiable between parties, in FL seller usually pays) – loan fees – survey fees – tax & insurance reserves – title expenses (lenders title insurance policy and owners policy)
FL Transfer Taxes (3)
!!!
Types:
- State documentary stamp tax on deeds = 0.007%
- State documentary stamp tax on promissory notes = 0.0035%
- State intangible tax on new mortgages = 0.002%
Closing costs & types (2)
Cost associated with closing the real estate transaction
Can be:
- Recurring = normally annually, ie. property tax & insurance
- Non-recurring = tend to be the bulk of the cost
a. Associated with home-purchase process
b. Associated with lender (ie. loan originator fee)
Home-Purchasing Process Closing Fees
Closing costs, non-recurring
- closing/escrow/settlement fee – courier fee – home inspection fee - HOA transfer fee - home warranty – legal or document preparation fee - notary fee – option fee (i.e. To terminate the contract) – fast inspection/treatment – recording fee – title insurance
Lender-related Closing Costs
- admin fee – appraisal review fee - appraisal fee – assumption fee – credit report fee – escrow waiver fee – flood certification fee - flood monitoring – loan originator fee – mortgage broker fee – tax service fee – underwriting fee – wire transfer fee - warehousing fee
Net to Seller
How much money the seller will receive from the transaction
Net seller = seller’s credit - seller’s debit
Credit/Debit (seller vs buyer)
Credit = positive balance Debit = negative balance
Seller (+)
Credit increases money received
Debit decreases money received
Buyer (-)
Credit decreases money to be paid
Debit increases money to be paid
