Closing is the point at which a contract between a buyer and a seller is executed, and the title to the property changes hands. This process has a variety of associated costs, most of which are paid at closing.

Normal Closing Costs
Closing costs can be highly variable since they're dependant on the size of the mortgage and the value of the property. Typically, closing costs are between three and five percent of the property's value, and may include the following:

• Loan origination fees - also called points (one point equals one percent of the mortgage). The standard fee is...Read More >>

When you sell your home, the profit you make can be subject to the capital gains tax. Understanding how the capital gains tax laws operate may help you pocket more of the profits. While it's important to talk to your tax advisor about your specific situation, here are a few guidelines to help you get started.

Capital gains tax rates are determined by a combination of:

• The profit from the sale of your home
• Your overall income (your tax bracket)
• The length of time you held your investment (in this case, your home)

When selling your primary residence, you...Read More >>

Whether you're a first-time home buyer or need to refinance, it's imperative that you do some research before obtaining a mortgage. Many consumers take the first loan offered to them and end up paying thousands more than they should have. Consider the following tips which will help you to avoid costly mistakes when obtaining a mortgage on your home.

Shop Around for a Mortgage

As with any major purchase, it makes sense to shop around. Many lenders often push the loans for individuals with lower credit as there is often more of a payout for them. If you don't know what...Read More >>

Getting a mortgage isn't always a case of simply heading down to your bank and applying. There are several different types of institutions that arrange mortgages, and you may want to consider your options carefully before choosing which type to go for.

Banks and Credit Unions
Banks and credit unions use money deposited with them to make loans and mortgages. If dealing with a local institution is important to you, a mortgage banker may be a good option. Additionally, if you consolidate all your financial affairs with a single bank, it may make it slightly easier to get favorable interest rates...Read More >>

Federal Rates

Mortgage interest rates are dependant on federal interest rates, which are influenced by the Federal Reserve. The aim of the Federal Reserve is to stimulate the economy while avoiding inflation, by setting terms for the federal funds rate (the interest rate which banks charge each other for short-term loans), and the discount rate, (the interest rate lenders pay to borrow from the Federal Reserve). The interest rates that banks pay directly influence the interest rates they charge consumers. If the Federal Bank sets a relatively low interest rate, lenders respond by lowering interest rates for consumers, which reduces the...Read More >>

Consumer groups believe that lenders should be held liable if they allow borrowers to take home mortgages that aren't suitable for them. In prior articles in this series, I concluded that a suitability standard was not an effective way to deal with bad mortgage selection, unaffordable loans or refinances that don't benefit borrowers. This article looks at suitability in connection with the problem of overcharges.

Borrowers are overcharged when they pay more for the same service than they would if they had the information needed to shop alternative sources effectively. For example, you pay 6 percent and one point whereas if...Read More >>

When you apply for a mortgage, you'll need to supply the lender with several documents to verify your debts, income and assets. These documents will be used to calculate how much you can afford to borrow. Only verifiable sources of income may be used in this calculation, so it's important to be thorough and keep good financial records. When supplying debt verification, any debt that will be paid in full within six months need not be included.

If you're a first-timer, the process can be overwhelming. It pays to find out what you need in the way of paperwork well before...Read More >>

Private mortgage insurance has become a common way of offsetting the risk for mortgage lenders when buyers have a small down payment. If your down payment on a property is less than 20% of its appraised value (or sale price, in some cases), your lender will require that you obtain private mortgage insurance. This insurance is protection for the lender against a default on the loan.

How Much and Who Pays?

The borrower is responsible for paying private mortgage insurance, and the insurance payments are added to your mortgage loan total and your monthly mortgage payments.

The cost will vary depending...Read More >>