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Closing Attorney/Escrow Agent
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Listing Agent
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Selling Agent
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HUD-1
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Closing Costs
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Pre-paid Items
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Escrow Items
> Tax
Prorations
Closing Attorney/Escrow Agent
In Georgia, only attorneys close loans and handle real estate
closings. The attorneys act much like title companies or escrow
agents in other states. The attorney represents the lender ot
mortgage company. The attorney role is to prepare the closing
statement based on the lender’s instructions, prepare many of the
legal documents based on the title report, enforce the contract of
sale between the parties and disburse the funds at closing.
Any party in a closing may hire their own attorney to represent them
but this is rarely done in Georgia.
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Listing Agent
This is the real estate agent who represents the seller and lists
the property for sale to the public.
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Selling Agent
This is the real estate agent that works with the buyer to find the
buyer a house. The selling agent usually represents the purchaser
and will have a Buyer’s Broker Contract with the purchaser. If the
selling agent is also the agent that has the house listed with that
particular seller, the agent can work with the seller and the buyer
and be a "dual agent".
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HUD-1
This is the closing statement that puts the terms of the contract
into effect. It coordinates and calculates the sales price, the
closing costs, the seller’s mortgage pay off, the real estate
commission and the tax prorations. This is where the "bottom line"
is as to how much the purchaser needs to buy the house and how much
the seller gets for selling the house.
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Closing Costs
When you apply for a loan, the lender will give you an estimate of
your closing costs. These are cost to get the loan. There is usually
an origination fee, appraisal fee, credit report, underwriting fee,
processing fee, court fees and legal fees. The lender will estimate
each individual cost as well as a total.
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Pre-paid Items
These are items paid at closing "in advance".
a. Hazard/Home Insurance
Your insurance on the property has to be pre-paid for one year.
Subsequently, the insurance premium is paid from the escrow
account.
b. Interest
You must pay interest for the remaining days of the month when
you close. Ex. If you close on June 25, you pre-pay 5 days
interest -6/25 to 6/30-and your first regular mortgage payment
is August 1
c. Mortgage Insurance
If you have an FHA loan, or if your loan amount is greater than
80% of the sales price, you must pay mortgage insurance. This is
insurance to protect the lender is case the borrower defaults on
the loan. This is REQUIRED. Mortgage insurance differs based on
the type of loan and the type of mortgage insurance which is
available on your loan. Usually, some up-front mortgage
insurance must be paid at closing. Ask your loan officer if
mortgage insurance is required. The costs can be estimated in
advance.
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Escrow Items
Most lenders require that the borrowers escrow for taxes and
insurance, and mortgage insurance if your loan has mortgage
insurance. This is an amount set aside to pay these costs as they
come due. These costs are added to your principal and interest
payment on your loan to make your regular monthly payment.
a. The amounts set aside monthly and added to your regular
payments are usually 1/12 of the annual amounts. Ex. If your
insurance premium is $387 per year, then 1/12 of $378 is added
to your payment, that is $31.50.
b. For insurance and mortgage insurance, the lender will usually
require an up front deposit of 2 months. (In the above insurance
example, 2 months of insurance at $31.50 per month -$63.00-
would be deposited at closing into the escrow account.
c. Deposits into the escrow account at closing for taxes is
based on a different formula. After determining what is 1/12 of
taxes, the up front deposit into the escrow account is based on
when the taxes are paid. Therefore, the tax deposit could range
from the minimum of 2 months up to 12 months.
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Tax Prorations
Taxes are paid on an annual basis. When property is sold in the
middle of the year, the buyer and seller must arrange to divide the
taxes based on time of ownership. In Georgia, taxes are always for
the January-December calendar year, even though some counties bill
their taxes in July. Ask your attorney is you have questions about
how tax prorations are calculated.
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