The Lowdown on Closing Costs

When you get a mortgage, you will need to pay closing costs, which are fees – charged by lenders and third parties — related to the purchase of the home. So, in addition to owing the lender the down payment on the home and the principal and interest related to the mortgage, you will also owe the lender and third parties closing costs, which you usually pay at the time that you close on your mortgage. Most of the time, it is the home buyer who pays the closing costs, rather than the seller, though on some loans such as VA loans, the seller pays a portion of these costs.

What charges go into your total closing costs?

Closing costs vary widely based on where you live and the property you buy. Closing costs often include things such as:

• A fee for running your credit report.
• A loan origination fee, which lenders charge for processing the loan paperwork for you.
• Attorney’s fees.
• Charges for any inspection required or requested by the lender or you.
• Discount points, which are fees you pay in exchange for a lower interest rate.
• Appraisal fee.
• Survey fee, which covers the cost of verifying property lines.
• Title insurance, which protects the lender in case the title isn’t clean.
• Title search fees, which pay for a background check on the title to make sure there aren’t things such as unpaid mortgages or tax liens on the property.
• Escrow deposit, which may pay for a couple months’ property taxes and private mortgage insurance.
• Pest inspection fee.
• Recording fee, which is paid to a city or county in exchange for recording the new land records.
• Underwriting fee, which covers the cost of evaluating a mortgage loan application.

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Have a successful escrow with these tips

1. When you open escrow, specify “Fidelity” for your title insurance. Ask for your Escrow Reference number to use for all future communications.

2. Read and understand the Preliminary Title Report. If an item is not understood, phone your escrow officer or title officer.

3. COMMUNICATE with your escrow officer. He/She must be instructed when to order payoffs, releases, etc. It is important that you keep him/her informed as to loan approval and related issues.

4. Inform your escrow officer if any changes occur. All changes should be in writing. Remember, with rare exceptions, escrow acts only on MUTUAL instructions.

5. It is important to understand the fiscal tax year, debits, credits, prepaid interest, impounds, and due and delinquent dates in order that this information will be easily understood by your client. Familiarize yourself with “normal” buyer’s and seller’s closing costs.

6. Check each signature for accuracy as to middle initials and spelling. Have your client sign exactly as shown on the document. Make sure all required documents are signed and notarized when applicable.

7. Double check all papers and documents before returning them to your escrow officer to verify the following:

a. They are signed properly. Any and all changes are initialed.

b. The vesting shows as the clients had requested.

c. Addresses are supplied for all future correspondence.

d. Any changes in phone numbers are provided.

e. Any and all addendum’s are executed.

f. All funds held by the broker are deposited into escrow.

g. The client has noted if their closing statements/funds are to be mailed or picked up.

h. The notary completes the acknowledgment, signs it and places the seal clearly.

i. Closing fund are sent by certified/cashiers check or wire.

Contact me with any questions - Tina
http://fidelityoc.com/tina4title

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Going through escrow? Here is a breakdown of everyone’s role

The Buyer

• Deposits funds to pay the purchase price, and funds for property and closing costs.

• Provides deed of trust or mortgages needed to secure the loan.

• Arranges for borrowed funds to be deposited into escrow.

• Provides, if required, documents such as inspection reports, insurance policies and lien information to verify compliance to the instructions.

The Seller

• Deposits the deed to the buyer with the escrow holder.

• Provides evidence to meet the buyer’s condition of sale, such as proof of repair work and inspections.

• Submits other documents, such as tax receipts, mortgage information, insurance policies, and warranties.

The Lender

• Deposits loan funds, lender instructions, and other loan documents with the escrow holder.

The Escrow Holder

• Serves as a central depository for funds and documents.

• Obtains a title insurance policy, when required.

• Fulfills the lender’s requirements if applicable.

• Secures approval from the buyer on requested documents.

• Prorates insurance, taxes, and rents, as instructed.

• Fulfills buyer and seller instructions.

• Allocates funds for closing costs, and verifies that required funds from each party are deposited into escrow.

• Once all conditions are met, the escrow holder causes the necessary documents to be recorded. Executed loan documents are forwarded to the lender.

11 escrow terms that are good to know!

1. Broker: This is the person who represents the buyer/seller during a real property transaction. When buying or selling real estate in California through a broker, you are protected by dealing with a party who is operating under state license.
2. Escrow: This means to deposit money and documents with an escrow agent, usually in the form of a corporation, to be used as specifically described in the written instructions of the parties.
3. Escrow Officer: This person writes the written instructions of the parties for the escrow agent. These instructions govern the use of money and documents given by the parties involved.
4. Preliminary Report: This report shows preliminary ownership and encumbrance information. It is given to the escrow officer after the escrow is opened.
5. Taxes: The prorating of county, city, and irrigation district taxes and the calculation of bonds and special assessments requires skillful handling.
6. Insurance: At the time of closing, all premiums must be adjusted and all policies transferred. All changes must be made and the insurance companies must be notified.
7. Prorate: The division of proportionate shares of rent, insurance, taxes, etc. between the parties involved. This is usually calculated by an escrow officer.
8. Revenue Stamps: These are put on deeds to show that taxes have been paid at a transfer rate of .11% based on the sale price. The escrow officer uses these when appropriate.
9. Deed: This is a document that is used to transfer the ownership of land from one person to another. The form of the deed may vary.
10. Title: The right by which the owner of the land has possession of the property. Publicly recording a deed is a common way to establish a title.
11. Title Insurance: A policy which protects your rights as owner of a property, and will reimburse for any problems with the title to the property. Your real estate professional can provide free information about title insurance.

Tips on Title

The purpose of a quiet title action is to establish title against adverse claims to real property or any interest in the property. [Code Civ. Proc. §760.020] The remedy of quiet title can be combined with other causes of action or other remedies. In an action or proceeding in which establishing or quieting title to property is in issue, the court may, in its discretion and on the motion of any party, require that the issue be resolved pursuant to the Code Civ. Proc. provisions relating to quiet title actions. [Code Civ. Proc. §760.030]

Jurisdiction

A quiet title action must be brought in the superior court of the county in which the real property is located. Once the action is before the court, the court has complete power to determine title issues. [Code Civ. Proc. §§760.040, 760.050]

Requirements

A complaint to quiet title must be verified and must contain all of the following information [Code Civ. Proc. §761.020]: 1. a description of the property that is the subject of the action. This must include both the legal description and the street address or common designation, if any. 2. the title of the plaintiff as to which a determination of quiet title is sought. If the complaint is based on adverse possession, the complaint must allege the specific facts constituting the adverse possession. 3. the adverse claims to plaintiff’s title. 4. the date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint must include a statement of the reasons why a determination as of that date is sought. 5. a prayer for the determination of plaintiff’s title against the adverse claims. The plaintiff must name as defendants all persons known or unknown claiming an interest in the property. [Code Civ. Proc. §§762.010, 762.020] Any person who claims an interest in the property can join in the action, whether or not named as a defendant. [Code Civ. Proc. §762.050]

Notice Of Pending Action (Lis Pendens)

A notice of pendency of action is required in any quiet title action. [Code Civ. Proc. §761.010] A “notice of pendency of action” or “notice” is a notice of the pendency of an action in which a real property claim is alleged. [Code Civ. Proc. §405.2] Formerly known as a “lis pendens”, a notice of pendency of action provides constructive notice to purchasers or encumbrancers of real property of any pending actions affecting title to or possession of the real property and enables those parties to find notice of pending litigation in the recorder’s office in which the real property is located. It furnishes the most certain means of notifying all persons of the pendency of the action and to warn them against any attempt to acquire a legal or equitable interest in the real property.

Proof Requirements

A plaintiff seeking to quiet title against a person with legal title to property has the burden of proving title by clear and convincing proof, rather than by the preponderance of evidence usually used in civil cases. [Evid. Code §662] Evidence Code §662 does not apply when legal title itself is disputed. In that case, factual issues are determined by the preponderance of the evidence standard of proof.

Trial

An action to quiet title is an equitable action; there is no right to a jury trial. Quiet title is generally an equitable claim, and equitable defenses may be asserted against it. However, if the plaintiff is out of possession and seeks to recover possession by a quiet title action, the action is legal. [Medeiros v. Medeiros (1960, 3rd Dist) 177 Cal App 2d 69, 1 Cal Rptr 696] Judgment A judgment in an action to quiet title is binding and conclusive on all persons known or unknown who were parties to the litigation and who have a claim to the property. [Code Civ. Proc. §764.030] The judgment will not affect title of a person who was not a party to the action if their claim was of record or if the claim was actually known, or should reasonably have been known, to the plaintiff. [Code Civ. Proc. §764.045]

We want to share in your success. Our company goal is to maximize your performance by providing exceptional products and services that facilitate and expedite the closing process. From your first contact with a Fidelity National Title representative, to the closing of your transaction, our mission is to provide a fully responsive, problem solving environment that ultimately makes you successful. Please contact me with any questions – Tina Jent-Fodor  (949) 293-4187 

Enjoy a successful escrow with these steps

Follow these seven steps to ensure a successful escrow:

1. When you open escrow, specify “Fidelity” for your title insurance. Ask for your Escrow Reference number to use for all future communications.

2. Read and understand the Preliminary Title Report. If an item is not understood, phone your escrow officer or title officer.

3. COMMUNICATE with your escrow officer. He/She must be instructed when to order payoffs, releases, etc. It is important that you keep him/her informed as to loan approval and related issues.

4. Inform your escrow officer if any changes occur. All changes should be in writing. Remember, with rare exceptions, escrow acts only on MUTUAL instructions.

5. It is important to understand the fiscal tax year, debits, credits, prepaid interest, impounds, and due and delinquent dates in order that this information will be easily understood by your client. Familiarize yourself with “normal” buyer’s and seller’s closing costs.

6. Check each signature for accuracy as to middle initials and spelling. Have your client sign exactly as shown on the document. Make sure all required documents are signed and notarized when applicable.

7. Double check all papers and documents before returning them to your escrow officer to verify the following:

a. They are signed properly. Any and all changes are initialed.
b. The vesting shows as the clients had requested.
c. Addresses are supplied for all future correspondence.
d. Any changes in phone numbers are provided.
e. Any and all addendum’s are executed.
f. All funds held by the broker are deposited into escrow.
g. The client has noted if their closing statements/funds are to be mailed or picked up.
h. The notary completes the acknowledgment, signs it and places the seal clearly.
i. Closing fund are sent by certified/cashiers check or wire.

Hiring a Home Inspector? Ask this first.

1. Are you licensed or certified? Most states it is required to be licensed. This is the most important question you should ask inspectors. They should also provide proof of certification. If you live in a state that does not require a license from a home inspector, make sure they belong to the American Society of Home Inspectors. This shows they can be trusted and are professional.
2. What will the inspection cover? Every inspection is different, ask for copies of previous home inspections so you can see what will be inspected inside the home. Let them know if you have concerns in certain areas.
3. How long will the inspection take? The average on-site inspection time for a single inspector is two to three hours for a typical single-family house; anything significantly less may not be enough time to perform a thorough inspection. Additional inspectors may be brought in for very large properties and buildings.
4. Will I be able to attend the inspection? This is a valuable educational opportunity, and an inspector’s refusal to allow this should raise a red flag. Never pass up this opportunity to see your prospective home through the eyes of an expert.
5. How long have you been practicing in the home inspection profession and how many inspections have you completed? The inspector should be able to provide his or her history in the profession and perhaps even a few names as referrals. Newer inspectors can be very qualified, and many work with a partner or have access to more experienced inspectors to assist them in the inspection.

Top escrow questions answered

What is Escrow? An escrow is money or property put into the custody of a 3rd party until specified conditions are met.

How Do I Open Escrow? As soon as you execute your purchase agreement, your real estate agent will deposit your initial down payment into your escrow account. Your escrow officer will then send you escrow instructions.

How Will I Know Where My Money Has Gone? Written evidence of your deposit is included in your copy of the purchase agreement. Your funds will then be deposited in your separate escrow account.

What Do I Do Next? You will want to speak with your credit union, bank, mortgage company or savings and loan. You will be required to complete a loan application which will require personal and financial information.

What Happens After I Submit the Loan Application? The lender will begin the qualification process including verification of items submitted on the application and appraisal of the value of the property.

Assuming the Loan is Approved, What’s Next? Your escrow officer will make an appointment for you to sign your final loan papers. At this time, the escrow officer will also tell you the amount of money you will need to buy your new home. Your loan funds will be sent directly to the escrow by the lender.

What Are Escrow Instructions? Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions represent your written statement to the escrow holder protecting your interests. They authorize the escrow officer to order title insurance which provides ownership protection for your new home.

When Do I Sign Escrow Instructions? Your escrow officer will send escrow instructions to you for signing along with other forms such as: vesting instructions, statement of confidential information, and change of ownership form. Be sure to return your signed instructions and forms as soon as possible.

What Do I Need to Do Before My Appointment to Sign Loan Papers?

• Cashier’s Check: Obtain a cashier’s check made payable to the escrow company in the amount indicated to you by escrow.

• Lender’s Requirements: Make sure you are aware of your lender’s requirements and that you have satisfied those requirements before you come to the escrow company to sign your loan documents.

• Hazard Insurance: If you are purchasing a single family home, detached home, be sure to order your hazard insurance. Then call your escrow agent with the insurance agent’s name and phone number. You must have secured hazard insurance before the lender will send its money to the escrow company.

• Identification: Please bring a driver’s license or passport (photo ID) for each person who will be on the title with you to the escrow company. This is needed so that your identity can be verified by a notary public. It is a necessary step for your protection.

What is the Next Step After I’ve Signed My Documents?

After you have signed all the instructions and documents, the escrow officer will return them to the lender for review. This usually occurs within a few days and upon completion, the lender is ready to fund the loan and advise escrow.

What is An Escrow Closing? It is the culmination of the transaction. It signifies legal transfer of title from the seller to you. Usually the Grant Deed and Deed of Trust are recorded within one working day of the escrow’s receipt of loan funds. This signifies the close of escrow.

When Will I Receive the Deed? The original deed to your home will be mailed directly to you at your new home by the County Recorder’s Office This usually takes several weeks, sometimes longer.

We want to share in your success. Our company goal is to maximize your performance by providing exceptional products and services that facilitate and expedite the closing process. From your first contact with a Fidelity National Title representative, to the closing of your transaction, our mission is to provide a fully responsive, problem solving environment that ultimately makes you successful. Please contact me with any questions. – Tina Jent-Fodor, Real Estate Title & Development · Escrow Services · Real Estate Service

Joint Tenants vs. Community Property

Holding title as joint tenants or as community property involves a multitude of issues to be dealt with. Here are two distinguishing features between taking title as joint tenants or community property, that most people are concerned with.

When title is taken as joint tenants and one spouse dies, the surviving spouse automatically receives the property. This is called a right of survivorship. (Although the property does not go through any probate proceedings, the surviving spouse must still file an affidavit of death of joint tenant to remove the deceased’s name from the deed.)

When title is taken as community property however, and one spouse dies, there is no right of survivorship and the surviving spouse does not automatically receive title to the property. If the deceased spouse died without a will, the deceased spouse’s interest in the community property would go to the surviving spouse. If there was a will, the deceased spouse’s interest would be handled as outlined in the will. In other words, each spouse has ownership of their half of the community property and can leave it by will to their surviving spouse or any other third party.

When title is taken as community property however, and one spouse dies, there is no right of survivorship and the surviving spouse does not automatically receive title to the property. If the deceased spouse died without a will, the deceased spouse’s interest in the community property would go to the surviving spouse. If there was a will, the deceased spouse’s interest would be handled as outlined in the will. In other words, each spouse has ownership of their half of the community property and can leave it by will to their surviving spouse or any other third party.

One way of looking at the death scenario is that joint tenancy has more certainty and community property has more flexibility.

The tax consequences has been a little more blurred as of late but basically the issue is as follows:

If property is joint as joint tenants, the tax basis of the deceased spouse’s half interest would be “stepped-up” to the fair market value at the time of his/her death. The tax basis of the surviving spouse’s half interest would remain at its original basis.

For example: Husband and wife purchased their house for $100,000 with each spouse’s tax basis at $50,000. At the date of Husband’s death, the property’s fair market value was $200,000.

Since they held the property in joint tenancy, Wife automatically received Husband’s half interest upon his death.

Husband’s half interest tax basis (originally $50,000) is “stepped-up” to the fair market value at his death (i.e. $100,000). Wife then has property worth $200,000 with a tax basis of $150,000 (her original $50,000 basis plus her deceased husband’s stepped up basis of $100,000). If the property were sold for $200,000, there would be $50,000 of taxable gain.

If title is taken as community property, however, the entire property receives a “stepped-up” basis to the fair market value at the date of one spouse’s death.

For example: Assume the same $100,000 purchase and $200,000 value at date of death and further assume Husband’s willed his interest to Wife. Wife’s original $50,000 basis gets stepped-up along with Husband’s original $50,000 basis to the current $200,000 fair market value. Wife then has property worth $200,000 with a basis of $200,000. If the property were sold for $200,000, there would be no taxable gain.