Prequalified vs. Preapproved: What Mortgage Shoppers Need to Know

Prequalified vs. Preapproved: What Mortgage Shoppers Need to Know

Getting approval on a mortgage is a process with no shortage of moving parts.

That’s why residential mortgage consumers need to leave no stone unturned in figuring out where tripwires lie on the mortgage-approval landscape.

No question, the stakes are high, particularly given the lackluster U.S. economy.

Before the Great Recession, mortgage approvals were like ice cream flavors at Baskin-Robbins — numerous and easy to get. But in the last five years mortgage lenders have significantly restricted their offerings, and borrowers need to be prepared for the tougher requirements or risk being turned down by banks and other lenders.

One area where homebuyers run into problems is failing to make the proper distinction between being qualified for a mortgage and being approved for one.

In short, just because you are prequalified for a mortgage doesn’t mean you will get one. But when you are preapproved your chances for a green light from a lender are greatly increased.

What’s the difference between the two and how will it affect your hunt for the perfect mortgage?

Realtor.com reached out to several mortgage experts to clear the air:

The Definition

“In general, a lender who prequalifies a buyer discusses a buyer’s credit, income and assets with them,” said Michael Minervini, a real estate agent for Re/Max in Red Bank, N.J. “A lender who preapproves a buyer runs their actual credit and verifies their income and assets. That’s a major difference since agents and sellers view a preapproval as a more firm start to the home-buying process.”

Cal Haupt, president and chief executive officer at Southeast Mortgage, explained what the preapproval process means to homebuyers once it starts rolling.

“Your loan would be submitted for preliminary underwriting, which normally takes no longer than 24 hours,” Haupt  said. “Your mortgage consultant would then provide you with a preapproval letter that defines the loan amount you are approved to receive.”

“Preapprovals are normally good for a 120-day period, so it’s important to begin your home search with your real estate professional as soon as possible after receiving your preapproval letter,” he said.

The Distinction

According to David Hall, president of Michigan-based Shore Mortgage, a mortgage prequalification is an initial assessment of a potential buyer, and often it’s not worth the paper it’s written on.

But a preapproval goes deeper and involves a more thorough look into your income and expenses, including a look at your credit score.

“Let’s think in terms of the view from a plane,” Hall said. “The prequalification is a 250,000-foot view, and a preapproval is a closer-up, 30,000-foot assessment of the eligibility of a client to secure a loan.”

The Driver for Mortgage Borrowers

There’s no harm in getting pre qualified — it’s a good gateway to buying a home. But to lock down that home, focus on getting preapproved, Minervini said.

“Buyers should always get preapproved only,” he said, “And here’s why: First, a buyer can confirm the sample monthly payment that they may own when they close, and they can get an idea of the home’s price range. Then, they can determine if there are any potential unknown credit issues that may need to be addressed prior to purchasing.”

The Domino Effect

Getting square on prequalified versus preapproved streamlines the entire home-purchase process.

“If all parties involved are aware of the distinction, it helps everyone play their role to the best of their ability,” said Ted Rood, a senior mortgage consultant with Wintrust Mortgage and a contributor to Mortgage News Daily. “The listing agent who calls the mortgage originator to ask if the buyer’s income and asset docs have been examined clearly understands the differences between prequalifications and preapprovals.”

On the other hand, the mortgage loan originator who deals with the real estate agent has a better grip on the entire process, by providing clarity on the firm’s prequalification or preapproval process, he said.

Even homebuyers can leverage the distinction between the two processes to help their own cause.

“Clients armed with this information can request a thorough preapproval rather than a cursory prequalification, and play a role in ensuring the best possible handling of their transaction,” Rood said.

The Deal

The takeaway for homebuyers? Know the difference between being prequalified and pre approved, and focus your energy on accepting the former, but aggressively seeking the latter.

Do that and you’ve taken a huge step in buying the home of your dreams.

What Statistics Say About Open Houses

What statistics say about open houses

Posted on March 26, 2013 by Texas Association of REALTORS®

Before you discount holding an open house for your clients, you might want to consider that last year in Texas, 37% of all homebuyers used open houses as a resource during their home search. But open houses are also an important tool for buyers whose primary language is not English, according to data from NAR’s 2012 Profile of Home Buyers and Sellers.

Nationally, 59% of buyers who speak another language take advantage of open houses during their home search. Buyers who were not born in the United States are also more likely to attend an open house, with 57% of this demographic of buyers using open houses as a search tool in 2012.

Some other statistics on homebuyers’ use of open houses show that they could be worth your time, especially if you’re working with certain kinds of properties or targeting potential buyers. For example:

• Buyers of new homes use open houses more often than buyers of previously owned homes.
• Married and unmarried couples are more likely to walk through an open house than single buyers.
• Buyers age 65 and older are more likely to find their home through an open house than other age groups.
• Buyers with an income between $55,000 and $75,000 are more likely to find their home through an open house than buyers in other income brackets.

Whether you’ve held an open house before or are thinking about trying one now, learn the ins and outs of hosting one in “Open Houses 101” from the March 2012 issue of Texas REALTOR® magazine.

Get a Loan Approval

Get a Loan Approval

Few experiences are more frustrating than falling in love with a home that’s for sale and then discovering you can’t afford to buy it. The majority of first-time buyers need to finance their home purchase, and a consultation with a mortgage lender is a crucial step in the homebuying process because you need to understand your purchasing power before you begin to look at homes.

What Is a Loan Preapproval?

Lenders offer borrowers a prequalification letter or a preapproval letter, but most Realtors® recommend that you get a preapproval before shopping for a home. A prequalification letter will state the amount a lender thinks you can borrow based on your income and your credit profile without any actual documentation. Mortgage lending standards have tightened since the housing crisis and all loans now require full documentation and verification of income and assets, so most sellers will only accept an offer from a buyer with a full preapproval letter that’s based on verified information.

Sellers aren’t the only ones who benefit from you obtaining a loan preapproval, though. You’re better off with a preapproval for two reasons:

§  First, you’ll have gone through the credit check and paperwork requirements for a mortgage, so you’ll have clarity about your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer.

§  Second, since your documentation will already be in place, a loan preapproval based on everything other than the actual value of the home you’ll purchase will speed up the process once you make an offer.

How to Find a Lender

Your Realtor® should be able to recommend a lender or two for you to interview, but you should also ask friends and colleagues for someone they trust. You can check for a loan officer’s license and read reviews online to be sure you’re working with someone reliable. As a first-time buyer, you should call a few lenders to find someone experienced with first-time buyer needs who can possibly help you identify special loan programs in your area that could help you get into a home.

What to Expect From Your Lender

The best lenders take a collaborative approach with borrowers and explain all your loan options. When your lender checks your credit report, you should get feedback about ways to improve your credit profile and recommendations for how to handle your money between the time you apply for a loan and settlement day. Your lender should provide advice about when to lock in your loan rate and discuss the pros and cons of various loan programs.

What Your Lender Expects From You

Your lender needs you to be honest about your finances and responsive to all requests for additional information, no matter how unimportant it may seem to you. The more cooperative you are with a lender, the easier the loan process will be. You should be prepared with tax returns, W2s, bank statements, employer names and addresses, and your current landlord’s information.

Your lender will generate a loan approval based on your debt-to-income ratio and credit score, but you should also consider your budget and your own comfort level with a payment. There’s no need to borrow the maximum amount you qualify for, particularly if you know you plan to spend money on items that don’t show up on your credit report such as greens fees or ski trips. Your careful planning and preservation of your emergency fund are important for responsible, long-term homeownership.

Negotiating the Sale of Your House

Negotiating the Sale of Your House

Home sellers who’ve chosen the right Realtor, prepared their home for sale and priced it right are strongly positioned for a smooth real estate transaction, but perhaps the most complex moment in the sales process comes when you get an offer for your home. Whether you have one offer or several to consider, you should take a moment to congratulate yourself that you’ve got a buyer interested in purchasing your home.

How to Evaluate Purchase Offers

Ideally, your buyer or buyers have offered you full price or more, along with the perfect terms for the sale. However, the reality is that not every offer will be immediately acceptable. You’ll need to carefully evaluate each offer and begin a negotiation with the buyers and their agent.

Your Realtor should be your partner and educate you on the terms of the offer and help you understand the offer in the context of the housing market in your area. You’ll need to know whether you’re in a balanced market with equal numbers of buyers and sellers or one in which buyers or sellers have the upper hand. You’ll also need to estimate whether home prices are rising or falling in your community.

Before you begin to analyze any purchase offer, the most important step is to determine whether the buyer can fulfill the terms of the contract with financing. Your Realtor can check on the preapproval letter that should be included with any offer by consulting with the buyer’s agent and the buyer’s lender.

What Factors Should You Consider in a Purchase Offer?

Once you know the buyer can legitimately qualify for a loan, you should begin to evaluate the offer by looking at these factors:

§  How close is the offer to your asking price?

§  Will your home appraise for the contract price?

§  How large is the earnest money deposit that accompanied the offer?

§   Has the buyer asked for assistance with closing costs?

§   Has the buyer asked you to make repairs or to give a credit for home improvements?

§   Is the requested settlement date appropriate for your needs?

If you’re not immediately satisfied with the offer or are uncertain about whether to accept it, consider your options.

§  Are there other offers?

§  Can you wait for more offers to come in?

§  How will you handle it if no other offers come in after a particular deadline?

Making a Counteroffer

As a seller, you have the option of accepting the offer as is, declining the offer, or making a counteroffer. Your Realtor can give you specific advice about your negotiating stance based on your home and your market, but generally you’ll need to be prepared to compromise on some aspect of your home sale.

Your negotiations can go more smoothly if you have a clear sense of your own priorities, such as a particular settlement date, the ability to rent-back your home from your buyers, or a minimum price that you need to achieve to meet your financial goals. Your Realtor should have prepared a document showing you net proceeds at different sales prices that can make it easier to understand the value of different offers.

Negotiations proceed best when both you and your buyers respect each other’s needs and interests and come to an appropriate compromise with the help of your Realtors.

Preventing Insect Infestations

Diggin’ In: Preventing Insect Infestations

No one really likes spiders, ants and other creepy crawlers invading home and yard.
But, they are a natural part of our environment and there are some best-practice ways to deal with them.

“An essential aspect of landscape maintenance is insect control,” says Doug VanGundy, an entomologist with Central Life Sciences, which includes Amdro pest-control products.
”Problem insects can affect the vigor of plants and landscapes, either through disease, insect feeding or other destructive activities. Insects can also invade the interior of a home in search of food, water and shelter, becoming a general nuisance.”

Here are VanGundy’s tips on preventing insect infestations on your property:
Choose plants wisely. Native plants are less likely to attract unwanted pests.
Combat insects with essential nutrients. One of the best defenses from problem pests is a strong, actively growing, well-maintained plant. Proper fertilization is essential to maintaining landscape beauty and plant development, helping sustain optimum plant growth and resistance to insects, diseases and environmental stresses.

Be an insect detective. Often, the evaluation of plant symptoms can provide an effective indication of the insect type. There are three common types of problem insects:

1. Sucking insects and mites cause damage by removing a plant’s life-sustaining sap from plant tissues. Symptoms include: wilting of plant tissues; stunting, curling or distortion of new plant growth; rust coloration of the upper leaf surface; or sticky substance followed by black sooty appearance on the upper leaf surface.

2. Chewing insects consume plant tissue, such as leaves, stems and roots, or burrow into plant tissue. Symptoms include: silvering of leaf tissues; complete removal of leaf tissues; and holes in and around plant leaves, stems, branches and trunks.

3. Boring insects target the trunks, stems, bark, buds and roots of woody ornamental shrubs and trees. These insects damage plants through their tunneling activities. Symptoms include: holes in the bark; tunneling activity in leaf tissue; dead terminal growth on a plant; or the complete removal of strips of bark.

Create a line of defense. Use a bait formulation such as an ant barrier to create a deterrent around your home. The bait kills a range of ant species outside so they are unable to infest interior areas. Foraging ants bring the granules back to their mound, resulting in the entire colony, including the queen, being destroyed.

Clean up debris. Remove loose debris from around the home and at the foundation of plants, including fallen leaves or dropped fruit, because pests often use this debris for nesting and feeding.
Protect beneficial species. Within every landscape and garden, there are pest predators that are beneficial to the health of plants — either by feeding on problem pests or by helping with soil aeration and drainage. Examples include: earthworms, spiders, ladybugs and praying mantises. Attract beneficial insects to your landscape with plants that provide nectar, pollen and other food sources.
Kathy is gardening columnist for the Daily Press, Newport News, Va
©2012 Daily Press (Newport News, Va.)
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Has Your Bank Advised You To Skip Mortgage Payments?

Has Your Bank Advised You To Skip Mortgage Payments?

It’s a familiar story. If you google “bank told me to miss a payment” you’ll find dozens of posts and articles about folks who say that they were current on their mortgage, and were told by their mortgage company or their mortgage servicer that they would have a better chance of qualifying for various refinancing programs if they are behind on their mortgage.

But instead of getting the assistance that was expected, these folks are shocked to receive a foreclosure notice in the mail.

I know from whence they speak. I’ve actually had banks tell me this while working on behalf of various homeowners. “There is nothing we can do as long as the borrower is current with their payments.” I’ve heard this from virtually all of the major lenders. “If the borrower is behind, we’ll be able to offer programs that are not available for borrowers who are current.”

As a real estate agent I’ve listed homes for sale that were valued well below the balance remaining on the mortgage. These properties are an obvious candidate for a short sale. But when attempting to get a short sale approved by a lender, it’s often necessary for the borrower to be behind on their payments. Banks usually won’t consider a short sale on a property when the payments are current. There is no incentive to do so.

Whether it’s a home that is underwater, or a borrower who has lost a lot of income due to unemployment, and is struggling to stay current, it’s highly likely, in my personal experience, that someone at the bank or mortgage company will let them know that they will have a better chance of qualifying for some type of special program if they miss a mortgage payment or two.

WHAT THEY DON’T TELL YOU IS THAT YOU’LL ALSO GET THE ATTENTION OF THE BOYS AT THE FORECLOSURE DESK IN PEORIA

The thing that most home owners do not realize is that while missing payments may make you eligible for some refinancing programs, qualifying for those programs is not automatic, but getting noticed by the folks in the foreclosure department will definitely be automatic. This is why thousands of people feel that they’ve been betrayed by their bank or loan servicer. Missing payments does in fact help borrowers qualify for assistance, but it also puts them on the short list for foreclosure.

In one such case, a borrower is suing JP Morgan Chase for wrongful death. Her husband died shortly after they received a foreclosure notice in the mail. The suit is still pending but the plaintiff’s claim is that they were told by a bank employee at a local branch that they needed to skip a mortgage payment in order to qualify for one of the special government refinance programs.

If you do receive this kind of advice from your lender or loan servicer, the rub is it’s probably true, but it may also result in foreclosure. Most folks don’t realize that the department talking to you about your loan is not the same department that will handle foreclosing on you. In fact, they may not even be in the same state, and they may even work for different companies. These departments do not communicate closely, and often “the right hand does not know what the left hand is doing” so to speak.

If you have missed mortgage payments, and even if you’ve been told to miss them, be vigilant and keep in contact with your lender. Be proactive about finding programs that you may qualify for. Do not assume that the bank or lender will be doing this for you. They won’t. The mistake here for most borrowers is in assuming that the bank, lender or servicer is actively working on finding you a program that you qualify for. They’re not. These companies have offices in multiple states, and multiple locations and the various departments are spread all over the country. One department has no idea what the other one is doing. It’s up to the borrower to spearhead the effort to find a new program that will help them get refinanced.

And if you do decide that you need to miss a payment, keep the money and set it aside. Do not spend it on other things. You may need to make that payment later on in order to qualify for the whatever special program may be available for you. Often payments are necessary within a certain time frame as part of the qualifying criteria. This process is never simple, and the bank is not going to have a coordinated approach to your particular case.

Yes it’s true that thousands of people have been told to miss a mortgage payment. Sometimes that strategy works out but understand that there are no guarantees. Never assume that the bank is working to help you. At the end of the day they are only trying to collect the money that they are owed under the terms of your mortgage contract.

It’s up to you to be vigilant about searching out all of your options and trying to find a program that will work for you. Even when you are working with one of the various non-profit groups set up to help borrowers, it’s still in the best interest of the borrower to be very proactive and stay in touch with all the parties involved and track your progress carefully. Otherwise, instead of a new loan with a lower payment, you may get a knock on your door from the local sheriff asking you to leave the property.

Four Uses for Home-Equity Loans

Four Uses for Home-Equity Loans

Home-equity loans can help you get out of debt, pay for home improvements and other big expenses, and put you well into the black, financially speaking. Home-equity money is yours to use as you wish, but most home owners focus on multiple economic priorities.

Here are four ways to use a home-equity loan:

1. Consolidate many debts into one
Debt consolidation is by far the most common way home owners use home-equity loans. It can also be the riskiest.

If you’ve racked up credit card and other debts, home-equity loans can pay them all off, leaving you with one monthly bill that’s likely smaller than the others combined. The interest rate on the consolidated debt will probably be half what you were paying on just one credit card, because the loan is secured by your home. Also, you can deduct the interest, up to the legal limits allowed for home-equity loans, and you may be able to pay off your debt sooner.

Having a single monthly bill can also improve your cash flow, leaving you more disposable income to save or invest. Over time, the single monthly payment improves your credit profile, revealing to lenders that you are a less-risky borrower who isn’t overburdened by debt.

However, the need for a home-equity loan could indicate a credit habit that the loan might only exacerbate. Don’t just pay off your old debts; cut up all but one card for emergencies. Consider debt counseling to learn how to budget your income. Tell creditors to close your accounts, so that you can’t use them and so that your credit report doesn’t show unused credit that you can still tap.

If there’s a difference between what you were paying each month on all your debts and the home-equity loan’s payment, save the money. Learn to use cash where possible. Most importantly, do not take on additional debt while the home-equity loan is still outstanding.

2. Invest the home-equity loan in home improvement
Home improvement is almost as common as debt consolidation as a use for home-equity loans. With carefully planned and professionally completed work, home owners improve the value of the home by adding square footage, bringing it up to current building codes and upgrading to contemporary design and features.

Potential problems stem from the decisions you make about the improvements. The best improvements increase the fair market price of your house. Remodeled rooms — notably kitchens and bathrooms — add the most value. Additions are fine, too, as long as you don’t overimprove. Additions should blend in both with your home’s existing style and with the design of the homes in your neighborhood. Interior painting, carpeting and the like probably won’t add much value, but those cosmetic touches will improve the salability of your home.

Keep in mind, however, that lenders who know your home is on the market may not give you a home-equity loan without additional costs. And if you have an equity loan when you sell your home, you must gross enough from the sale to pay off both the first mortgage and any outstanding home-equity loans.

3. Invest home-equity loans in college
Using home-equity loans for education is another popular choice, given the skyrocketing costs of post-secondary education. Also, families with higher incomes may not qualify for grants and government-backed student loans.

Education can be a good investment. An educated son or daughter is more likely to become financially independent sooner and can start building their own wealth rather than draining yours.

Unfortunately, college bills may come at about the same time when you are near retirement and may want home-equity loans to offset your reduced income. Don’t overlook special educational loans, tax write-offs and scholarships to meet your children’s educational needs.

4. Buy disposable goods and services
No matter what you do with your home-equity money, you can deduct the interest. That’s a compelling reason to buy those big-ticket items you’ve always wanted: a new car, a boat, a recreational vehicle. Home-equity loans are also a boon if you get hit with medical bills or some other emergency.

Don’t forget, though: When your car is ready for a trade-in, the recreational vehicle is up on blocks, and you are healthy again, you may still have equity loan payments to make. Your home is on the line.

Broderick Perkins wrote this article.

14 Things to Consider Before Buying a Home

14 Things to Consider Before Buying a Home

When you’re buying a home, it’s easy to let emotions get in the way of reality. “Sometimes we want something so badly, we’re not willing to ask all the questions we should,” says Leslie Levine, author of “Will This Place Ever Feel Like Home?” To make sure your dream home isn’t a mirage, follow these 14 tips:

1. Visit at various times of day.
The windows that let in so much light during the day may be a peeping Tom’s dream at night. That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour. The adjacent school may seem like a nice perk if you’re buying in the summer, but during the school year, daily playground noise and extra traffic may be more than you bargained for.

2. Research recent local news.
You need to look at more than the house: Examine the factors you can’t see. For example, perhaps the municipal water well has high levels of contaminants, or a perhaps a high-voltage power line may soon be coming through your back yard. You can also check with the city or county to see if there are any proposed projects.

3. Talk to neighbors.
How many people in the neighborhood own their homes? What do neighbors say are the pros and cons of the area?

4. Ask if the neighborhood has an association.
“Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” Levine asks. “The fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house.”

5. Quiz the sellers about house problems.
What past problems are the sellers aware of? Even if the issues have been fixed, it’s good to know that the house may be prone to, say, ice dams or water leaks so that you can take preventive measures rather than find out the hard way. If you know that the basement flooding was solved by building up the landscaping in a particular area, you won’t level the ground there.

6. Get a home inspection.
Virtually all houses have defects. Some are obvious, and most are curable. But knowing what needs repair can help you negotiate a lower price — or at least prepare you for costs you’ll soon incur. Strongly consider getting inspections for lead paint, radon and wood-eating pests, too.

7. Get detailed records on past improvements.
This isn’t always possible. But if you’re told the house’s exterior was painted two years ago — and then see a receipt noting the whole project cost just $1,000 — then you’re forewarned that cheaper materials were used and that you may be looking at repainting sooner than you thought.

8. Don’t assume remodeling will be easy.
If you voice your ideas to the sellers, you may glean valuable insights. For instance, perhaps that shower is in an odd location because, when the previous owners remodeled 10 years ago, they discovered a costly structural impediment to putting a shower where it would seem more appropriate.

9. Consider the view.
“So many neighborhoods now have teardowns,” Levine notes. “So look at the two houses on either side of you.” Do the adjacent houses look like they might be candidates for a teardown? Is the next lot empty? Does the neighborhood or town have restrictions about what your prospective neighbors can build there? “They may build some behemoth structure that affects your light or the way your house looks or your view,” Levine says.

10. Ask for utility bills. 
You may adore the Cape Cod architectural style or the high ceilings and glass walls in a modern home, but those winter heating and summer cooling bills may not fit your monthly budget. Ditto for the water bills that come with maintaining a pristine landscape.

11. Pay close attention to taxes.
Don’t just ask about the seller’s most recent tax bill; ask the amounts for several recent tax bills. In some areas, houses are re-appraised — and taxed at higher rates — frequently. That great deal and good investment may not seem quite so grand if the property taxes skyrocket year after year. Look at local news and talk to your Realtor about how taxes are used in this area. In some cities, schools are substantially funded through property taxes, which means you can count on yours increasing regularly.

12. Check with city hall.
Look into the property’s and the neighborhood’s zoning, as well as any potential easements, liens or other restrictions relating to your property. The seller should disclose these facts, but it’s better to be proactive. If you’re using a buyer’s agent, they should be able to help.

13. Reconsider the bells and whistles.
Are you sure you can live with a one-car garage, or a detached garage, or on-street parking? The pool may be a nice bonus, but can you afford the upkeep?

14. Explore the surrounding area.
If you’re new to the area, you may not know that only three blocks away, this pretty neighborhood backs up to a dumpy commercial zone or a less-than-savory part of town. If the home is near an airport, fire station, police station, hospital or railroad track, expect to hear trains, planes or ambulances throughout the day and night. Make sure you’re not too close to an agricultural area that may generate odors or kick up dust or other airborne problems.

Diane Benson Harrington wrote this article. 

Costs of Selling a Home: How to Estimate Closing Costs and Net Proceeds

Costs of Selling a Home: How to Estimate Closing Costs and Net Proceeds

What’s the price of selling your home? As a seller, you’re bound to face a parade of taxes, fees, commissions and miscellaneous closing costs that can whittle away up to 4 to 7 percent of your home’s sale price.

So, how do you know what net profit you’ll walk away with? Once you receive an offer, or maybe even when you sign your listing agreement, your real estate agent should give you a Seller’s Estimated Net Proceeds worksheet, which will list the expenses that will be deducted when you close.

Costs vary from state to state, but in general these are some of the closing fees you may encounter:

§  Mortgage payoff balance. Deductions from the sale price include your own home loan, second mortgages and home-equity lines of credit.

§  Loan payoff fee. Some lenders may charge you an administrative fee to pay off your loan.

§  Lien releases. If you owe money to a contractor or for court judgments or property taxes, a lien may have been placed on your property. You must pay those liens before the sale can close.

§  Prepayment penalty. Find out from your lender if there’s a penalty for paying off your loan early.

§  Recording fees. If you owe money on the property, you need to pay this fee to show that your debts have been fully paid.

§  Commissions for listing and selling agents. This is the price you pay to the agents for making the sale of your house. Usually the fee is 6 percent, with half going to your agent’s brokerage and the rest going to the buyer’s agent’s brokerage. The agents get paid by their respective brokerages.

§  Notary fees. Fee charged by a notary to verify your identity and to make sure the documents are executed properly.

§  Escrow fees. The escrow company is the intermediary between you and the buyer, ensuring that the money is handled properly. Escrow agents receive money from the lender, pay off your mortgage and closing costs, collect deposits and give the proceeds to the lender. You may be able to split these costs with the buyer.

§  Title search fees. Title insurance is not insurance per se but says that you have the legal right to sell your home. Title companies search public records to come up with a title insurance commitment. That commitment says you own the home, and it details anything else that may affect the title, such as mortgages, liens, easements, restrictions and home owner association declarations.

§  Seller concession. A seller concession helps buyers pay their closing costs. If the buyer asks you for a concession of, for example, 3 percent, that amount will be added to your agreed-upon home price, and you will give back that 3 percent to the buyer to pay for closing costs.

§  Repairs. You may be required to pay for repairs, either by negotiation with the buyer or by a condition of the lender.

§  Home warranty. Sometimes a seller will agree to foot the bill for a home warranty that offers a protection plan for the buyer’s first year in the home.

§  Termite letter. This document is required in certain parts of the country.

There may be other costs associated with selling your home, so speak with your Realtor about them early on. You don’t want to be surprised at closing.

Diana Lundin wrote this article.