SETTLEMENT ( Closing )

Mortgage settlement sometimes called mortgage closing can be confusing. A settlement may involve several people such as an attorney or, escrow officer and notary depending on which region of the country you are and many documents and fees.

Different regions have different customs and practices regarding who pays for what at settlement. Buyers and sellers are free to negotiate certain fees. In slow-moving real estate markets, the seller may agree to pay points or fees for the buyer. In fast-moving markets, the buyer may have to agree to pay more costs to close the deal. Whatever you negotiate will become the sales contract. However, be careful; if some buyer’s costs are shifted to the seller, it may increase the price you pay for the property.

Because practices vary significantly from area to area, it is difficult to provide estimates for settlement costs that fit everywhere. However, one rule of thumb for buyers is to figure that settlement costs will be about 3% of the price of your home. In some relatively high-tax areas of the country, 5% to 6% is more common.

Some settlement costs, such as homeowner’s insurance, private mortgage insurance, or points can be more expensive if your credit rating is low. Knowing your credit score can help you understand how lenders will evaluate your applications. Beginning December 2004 your lender is required to give you a copy of your credit score.