Shopping For Your Home Loan: Hud'S Settlement Cost Booklet - U.s. Department Of Housing And Urban Development (Hud) Page 41
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48Pest Inspection: an inspection for termites or other pest infestations of your
home. This inspection is frequently required by your lender.
Point(s): amount of money paid to reduce the interest rate on a loan. A point is
usually equal to 1% of the loan amount.
Pre-paid items: lenders often require the prepayment of items such as insurance
premiums for private mortgage insurance, homeowner's insurance, and real estate
taxes.
Prepayment Penalty: a fee charged if the mortgage loan is paid before the
scheduled due date.
Private Mortgage Insurance (PMI): insurance that protects your lender if you
default on your loan. With conventional loans, mortgage insurance is usually
required if you do not make a down payment of at least 20% of your home's
appraised value. Your lender may require payment of your first year’s mortgage
insurance premium or a lump sum premium that covers the life of the loan in
advance at settlement. The same insurance protection on an FHA loan is called
Mortgage Insurance Premium (MIP).
Recording and Transfer Charges: these charges include fees paid to the local
government for filing official records of a real-estate transaction.
Sales Agreement: the contract signed by a buyer and the seller stating the terms
and conditions under which a property will be sold. It may also be called an
“Agreement of Sale” or “Purchase Contract.”
Settlement: the time at which the property is formally sold and transferred from
the seller to the buyer. It is at this time that the borrower takes on the loan
obligation, pays all closing costs and receives title from the seller.
Settlement/Closing Agent: in some states, a settlement agent, or closing agent,
handles the real estate transaction when you buy or sell a home. It may also be an
attorney or a title agent. He or she oversees all legal documents, fee payments,
and other details of transferring the property to ensure that the conditions of the
contract have been met and appropriate real estate taxes have been paid.
Settlement Costs/Closing Costs: the customary costs above and beyond the
sales price of the property that must be paid to cover the transfer of ownership at
closing; these costs generally vary by geographic location and are typically detailed
to the borrower at the time the GFE is given.
Survey Fee: a fee for obtaining a drawing of your property showing the location of
the lot, any structures, and any encroachments. The survey fee is usually paid by
the borrower.
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