Mortgage closing or settlement (escrow closing) is a bit complex procedure, probably causing more questions from the borrower than any other. At Castle Mortgage Group, we aspire to serve you as your guide to any mortgage requirement and queries.

Commonly asked questions:

Settlement
A settlement engages several people, a variety of documents, and fees and is an area where misconceptions are plenty. Following are various aspects related to settlements in home purchases and may be helpful for refinancing:

Settlement is the last step towards becoming the legal owners of a home. A typical settlement process begins weeks…even months before, and follows an outline set by a buyer's original offer (the sale contract) to the seller of the house.  A settlement procedure may differ from one locality to another regarding who pays what closing costs. However, buyers and sellers are free to negotiate certain fees. Certain costs may be shifted that may affect the sale price of the property. Costs can also be cut by shopping around among providers of the settlement services.

There are three basic categories of charges and fees in settlement or closing transactions:

Charges for establishing and transferring ownership - These include title search, title insurance, related legal fees, notary charges, hazard insurance, and fees for conducting the settlement.

Amounts paid to state and local governments - Recordation fees, and prepaid property taxes.

Costs of obtaining a mortgage - Appraisals, credit checks, loan documentation fees, loan origination, commitment, and processing fees

Title Insurance
A lender is likely to require a title insurance policy, which protects him against any error by whoever searched the title. Typically, a title insurer may arrange for or conduct the title search after closely assessing the deal, however, many instances occur which unnecessarily hinders the process. This is why a title insurance policy is framed.

Keep your Title Insurance cost low

• Check with a title company whether the house you are buying was owned by the seller for only a few years.
• Obtain a re-issue rate, the premium will go down substantially. If no claims have been made against the title since the previous title search was done, the seller's insurer may consider the property to be a lower insurance risk.
• Shop around for the best rate. Compare prices for the premium as well as the coverage. Ideally, you should look for a policy with as little exclusion from coverage as possible. The exclusions should be listed in each policy.

Costs Imposed by the State
Transfer, recordation, and property taxes collected by local and state governments may be too high in some states. You cannot avoid paying these taxes, but you may be able to lessen your share of the bill by shifting some or all of the cost to the house. Remember, you must do this when you make your offer to purchase the property.

Closing Costs

• Application fee - This covers the initial costs of processing a loan request. All lenders do not impose application fee.
• Appraisal fee - This includes the cost of an independent appraisal of the home. A lender usually requires this opinion or estimate of the market value of the house for the loan.
• Survey - A lender may require an independent verification from a surveying firm to ensure that a house has not been encroached upon by any structures since the last survey conducted on the property.

Loan Origination Fees and Discount Points
One point equals one percent of the loan amount. For example, one point on a $150,000 loan would be $1,500. In some cases - especially with refinances - the points can be financed by adding them to the loan amount.