What are terms and closing costs?

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Transcripts

Jeff Thomas: Hi, my name is Jeff Thomas; I am a Mortgage Advisor with Family Lender Inc. in Fairfax, Virginia. Today, we are going to go over the different parts of a Mortgage loan file and how to purchase a home. To tell you little bit about myself, I have been in Mortgage Business for 15 years, I recently co-authored a book with Todd Ballenger called Borrow Smart Retire Rich. The seven parts of that, we will discuss at the end of the video. Today we are going to discuss the different parts of mortgage terms and the ones that I feel that are most important to you?

Host: What are terms in closing-cost?

Jeff Thomas: Terms in closing cost are what I really think confuses most home buyers these days. There are so many terms and acronyms that the mortgage industry throws out, point, discount point, origination fee, appraisal, title, Escrow. We found that we can really break those down into a couple of different things, you have your origination fee, that s typically how your mortgage loan of, that s going to get paid. Within that you are going to have an appraisal and then the Escrow is really what I consider, it s a savings account that the lender sets up for you at the time of closing and every month when you make your payment, a portion of your principle money goes pay to the lender back, you have taxes and insurance and those go into that account. So, on the anniversary date of your mortgage, they are going to pay you insurance. If your taxes are paid twice a year, they are going to get paid through your Escrow account. So, you are not on a monthly basis having to save to pay your insurance next year and your property taxes. That s what s the functions of the your Escrow account is.

The other terms that really confuse some client these days is, what happens to closing, if your settlement fee, Recordation cost, title charges. The title charges are basically from a third party and that your Title company and those are the fees that they charge to be the eyes and ears for the lender, to make sure everything gets recorded at the Courthouse correctly. Recordation fees are charged by your City, State or County to transfer the note and the deed and of the seller s interest in the property to you.

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