Evening star., 1941-03-29
BY RUFUS 5. LUSK.

by htftS >. LOSk.
Willow 1t comes time for a buyer
of house 10 settle" that is to
carry out the terms of the pur-
chase contract, there are certain
additional expenses that have to
be met. There is a reason for
every charge made and the purpose
OF this article is to explain each
one in detail. A buyer should know
about these costs so that he may be
prepared to meet them
When you decide TO buy home
you make an offer" by signing a
sales contract, usually a standard
form. This offer sets out the price
of the property, the cash payment,
the date of settlement, and the
mortgage Or mortgages, if not an
all cash transaction. There are
other StipulationS, general and
specific, but these are the prin-
cipal ones. When you sign this
offer you must also make a cash
deposit as an earnest of good faith.
If your offer is accepted by the
owner it becomes a binding con-
tract upon both parties. AS soon
as 1t is accepted title search
should be ordered, which may take
two or three weeks. When the
title is ready, you are notified and
a definite time is set to settle the
case. A skilled settlement clerk
OF The company-moSt, but not all,
settlements are now made by title
companieS-goes over with you and
the owner together in detail all
the provisions of the contract of
sale and sees that its terms are
fulfilled by both parties.
Differences in Fees.
In order to make all this concrete
there is an accompanying table
which shows typical buyers
settlement, when buying an old
house, together with an eXplana-
ton of just what each item means.
Understand that this is merely an
example. No two cases are alike
If there is only one deed of trust
and two thirds of the new homes
are financed in this way. charges
will be less than in this case. Taxes
and interest adjustments vary
greatly with the length of time
between the date the property is
transferred and when the costs
become due and payable. Record
ing and title charges vary in
different Jurisdictions
II the house you are buying in
wolves the securing of an F. H. A
insured loan. the settlement costs
will be considerable higher than
otherwise. For example. in a large
operation in nearby Virginia the
settlement costs, when the loan was
made by bank. averaged $92: when
guaranteed by the F. H. A, about
$50. This difference is due to the
preparing of interest and taxes.
which, of course, have to be paid
anyway; also longer deeds of trust,
which cost more to record, and be-
cause the F. H. A. requires that the
title must be insured, costing about
$3.50 more thousand than certif-
Gates of title which a bank will ac-
cept. However, the F. H. A. plan
offers some advantages which the
two-trust method outlined here
does not.
Explanation Of Items.
Here is an explanation of each
Item in the accompanying table.
l. The price, $3.50, the pur-
chaser paid for the property.
2. The amount of the purchase
price covered by the first trust,
$4,000.
3. The purchaser gave a second |
mortgage for S1,100, which is the
difference between the purchase |
price, $3.50, and the combined |
total OF the first mortgage S4,500, |
and the cash payment of $3.50.
4. The amount of interest that
will accrue before the buyer makes
his first monthly payment of S45
on February 4, and which he must
pay In advance in order to start
of with no arrears in interest.
5. The amount Of taxes which |
accrued between January and
January IA, when the buyer was
not IN possession of the property. |
So. therefore, the seller credits this
amount to the purchaser.
s. The water rent has been paid |
in advance TO the 30th of April |
by the seller, so the purchaser must
give the seller 81 SIS for proportionate
amount of paidup service.
7. These two items, fire and wind |
storm insurance, for three years, are
clear.
8. A fee charged by the title COM
pany for the settlement of a case
This includes disbursement of
monies TO all parties, payment of