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, and fees for conducting the settlement.
* Amounts paid to state and local governments. These include city, county and state transfer taxes, recordation fees, and prepaid property taxes.
* Costs of getting a mortgage. These include survey, appraisals, credit checks, loan documentation fees, notary charges, loan origination, commitment and processing fees, hazard insurance, interest prepayments, and lender's inspection fees.
Let's examine them one by one.
Title Search: Who Owns What?
When someone buys or sells a car, proving ownership is relatively easy. The owner has a certificate of title issued by the state in which the car is registered. When it comes to houses, providing clear title is not so simple. Moreover, your lending institution will not give you a mortgage loan on a house unless you can prove that the seller owns it. The proof comes in the title search.
How the title search is carried out depends upon where the property is located. In many parts of the country, public records affecting real estate title are spread among several local government offices, including recorders of deeds, county courts, tax assessors, and surveyors. Records of deaths, divorces, court judgments, liens, and contests over wills (all of which can affect ownership rights) also must be examined.
In a few localities, property records are fully computerized and the job can be completed fairly quickly. In the majority of localities, however, title search must be performed to establish the seller's clear title. This means examining public records, in courthouses and elsewhere, to assure both you and your lender that there are no claims against the property that you are buying.
The title search may be carried out by an escrow or title company, a lawyer, or other specialist.
