Financing in Massachusetts>Question Details

Jgmacarthy, Home Buyer in Massachusetts

Learning of closing costs one day prior to closing?

Asked by Jgmacarthy, Massachusetts Fri Jan 29, 2010

Am I correct when I read that you only find out the actual amount of closing costs one day before you are expected to close on a home loan?

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It depends, when did you receive your Good Faith Estimate? This year or last?

If it was this year's form, your costs represent a ceiling and they won't go any higher.

If it was last year's form, no such rules were in place.

If you're confused about why it wasn't always a ceiling, join the club :)
0 votes Thank Flag Link Mon Feb 1, 2010
Correct. You are required to receive the HUD-1 at least 1 day prior to settlement.

While you should have an accurate Good Faith Estimate from your lender at the time you applied for a mortgage, there are additional funds you may have to come up with at the settlement table.

Usually, at the time the Good Faith Estimate is prepared, your mortgage lender or broker may not know exactly how much your property taxes are and/or how much your homeowner's insurance will be. And, they won't know how much your homeowner's insurance is until you actually apply for and pay the 1st year's premium.

Additionally, at the time of settlement, you will have to repay the seller for any property taxes that he has paid beyond the date of settlement. The same applies to water and sewer utility bills. That information often is not known until just days before settlement.

Finally, if property taxes are due typically within 60 days of settlement, you will be required to bring the amount that is due for the next billing to the table as well. That way the lender has sufficient funds to pay your next property tax bill.

All other charges should be as disclosed on the Good Faith Estimate unless you hired a particular service provider such as the attorney. Those fees can vary from the estimate.
0 votes Thank Flag Link Fri Jan 29, 2010
You should be able to get your realtor to provide an estimate of your closing costs before submitting an offer ... also your lender is required to provide a GFE (Good Faith Estimate) of your closing costs early on in the purchase process (normally within 3-5 days). It's possible that you already have received one or both of these estimates, but nobody explained them to you (which should not happen).

If you have a contract, are wondering about your costs your lender is the best place to start ... if you're close to settlement, the title company or attorney conducting your settlement may be the best place to check .

All the best!

Michael Mulvey, U.S. Army (Retired), Full-time Realtor
0 votes Thank Flag Link Fri Jan 29, 2010
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