May 15, 2012
There are many things about closing the deal on a new home that first-time home buyers should understand before getting to the bargaining table.
Do you know, for example, what information should appear on a Good Faith Estimate, or how to compare that estimate to your HUD-1 Settlement Statement?
Some borrowers are surprised to learn that some cost adjustments may be necessary at closing time. According to the FHA official site, “At settlement it is usually necessary to make an adjustment between buyer and seller for property taxes and other expenses. The adjustments between buyer and seller are shown in Sections J and K of the HUD-1 Settlement Statement.”
Property taxes are just one area where the borrower should come to the bargaining table knowing what to expect.
In the example listed on the HUD page titled, Adjustments To Costs Shared By Buyer And Seller, “the borrower will have to pay a whole year’s (property) taxes on the following December 1. However, the seller lived in the house for the first six months of the year. Thus, one half of the year’s taxes are to be paid by the seller.”
Don’t be taken by surprise when it comes to issues like these. Doing your homework, learning in advance what to expect, and budgeting accordingly will prepare you to move through the FHA home loan process with confidence. Fortunately, the FHA and HUD offer a great deal of resources to educate newcomers to the FHA loan process on issues exactly like the ones mentioned above.
This video, produced by FHA/HUD and distributed on the official HUD channel on YouTube, answers many questions about the closing process and is an excellent way to get started learning about closing on an FHA mortgage.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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