Buying Your Louisville Home - Escrow and Closing Costs
Closing costs are the fees for services, taxes, or special interest charges that are included in the purchase of a Louisville home. These can include loan points, title insurance for both lender and buyer, escrows to cover the cost of property taxes and home owner's insurance, prepaid interest, and document fees. Often Louisville buyers negotiate with sellers to pay all or part of the buyer's closing costs, which the Lender has to be in agreement with this as well. Property taxes and Home Owner's Association fees are prorated between the buyer and seller as of the date of closing.
Do I Have to Purchase Title Insurance?
The lender requires the buyer to purchase Lender's Title Insurance; Buyer's Title Insurance is optional, although recommended. You may want to consult with your Louisville real estate attorney regarding purchasing buyer's title insurance.
An escrow account is a trust account established by the lender to hold money to pay for real estate taxes and homeowners' insurance premiums. Each month the Buyer pays roughly one-twelve of the yearly charge into the escrow account for home owner's insurance and property taxes. The mortgage company then pays the insurance and tax bills when they are due.
If you are taking out a FHA or VA loan, the lender typically requires an escrow account be set up for the purpose of receiving and disbursing money to pay real estate taxes and insurance premiums when they are due. A conventional loan may not require an escrow account if you have a large enough down payment; although, you still may choose to escrow funds for convenience. If you do use an escrow account, your full monthly house payment will include principal, interest, taxes, insurance (P.I.T.I.), and possibly mortgage insurance.