Tips Regarding Folsom CA Real Estate and Beyond!

After a seller and buyer negotiate terms in the contract, all the financial requirements of that contract must eventually be performed. Money required of both the seller and buyer have to be dealt with: deposits paid; sales price confirmed; mortgages paid off; new mortgages taken; subsidies to the buyer/seller carried through; fees for lender, title, insurance, taxes and various other services accounted for.

The settlement company is the entity that determines from whom and to whom these moneys are paid -- entering them all onto a most important document needed for settlement -- the HUD-1 Form.

The HUD tracks all the costs related to the transaction and you need to be pretty familiar with your contract to make sure the right charges are flowed to the correct side of the form. The left side of the form (beginning in paragraph 'J') calculates the buyer's credits and debits; and the right side (beginning in paragraph 'K') tracks credits and debits for the seller. The amount for these two slots is the same -- the contract sales price.

Your Realtor will get a first glance of this form early on -- or they should.  Unfortunately, mistakes can be made on this form that can cost the consumer thousands of dollars. At my last transaction, the form included an erroneous fee to be paid to the mortgage company in excess of $2,000 -- fortunately, I caught it before it went to funding.

Generally, the form will start with "Gross amount due to the buyer" and add on or deduct from that amount. Since most of the "gross amount" is in the form of a mortgage, how much a buyer must actually write out on a check will be determined from this point. With the right kind of contract or mortgage, a buyer could actually walk away with cash from the table -- but that's far and few between and would require a different column altogether.

Nevertheless, the buyer is going to face charges such as the following:

• Settlement fees
• Earnest money deposit
• Taxes
• Assessments
• Loan origination fee
• Loan discount
• Appraisal fee
• Credit report
• Inspection fees
• Mortgage insurance application fee
• Interest for the month
• Mortgage insurance premium
• Hazard insurance premium

And the list continues…

Depending on how the contract was negotiated, the seller could face paying the same fees on some of the above items, except for items a particular loan program requires for the buyer to pay for from his or her own funds.

Many of the items may be marked "P.O.C." -- which means "paid outside of closing." This notates the items the buyer or seller paid for prior to settlement, such as home inspections, credit report, appraisal, etc.

A seller can sometimes postpone paying for fix-up fees, new carpeting and other incidentals in preparing the property if you can get the vendor to wait on getting paid until settlement. You need to notify the settlement agent that such funds need to be dispersed from the proceeds of the sale.

A word of warning on reviewing the HUD-1 Form. Both buyers and sellers look at the settlement process as just the final hurdle to get out the door and into their new home. Be patient and take your time in looking over this document. This is the piece of paper that determines just how much money you're walking away with or how large the check will be that you're going to write before walking out the door. As demonstrated earlier, a clerical error on this form can cost you thousands of dollars. Review each line and have your settlement agent explain any charges you don't understand.

Alicia Naiman is a CA Realtor® and Real Estate Appraiser specializing in Folsom CA Real Estate.  For complete information about the Folsom, CA real estate market including a free list of current homes for sale, property values and more please visit the most complete website online dedicated to everything Folsom CA Real Estate at http://www.livinginfolsomtoday.com. Please feel free to contact me with any of your real estate or mortgage related questions and I will be more than happy to answer them!

Call me at 916-502-4420 or email me at anaiman@connectrealty.com.