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Additional Information

There are various ways to hold title to property and the laws vary by state.  This decision has many legal ramifications that can affect you and your heirs.  Please see legal advice before making this decision.  Here are a few examples of some of the most common ways titles can be held.

Sole Ownership

The simplest way to hold title to a property is called sole ownership.  Sole ownership means that one person alone holds title to the property.  This is most often used by persons who are single, but a married person can also choose sole ownership if his or her spouse is willing to sign a document renouncing any rights to the property.

Joint Tenancy With Right Of Survivorship

Joint tenancy with right of survivorship means two or more people hold title to the property together.  If one person dies, the ownership automatically defers to the remaining owner(s).

Tenancy In Common

Tenancy in common allows multiple owners to each own a percentage of a property.  In this form of holding title to the property, an owner can sell his or her percentage share of the property at any time.  Owners also can share their share to their heirs.  The property does not revert to the other owners automatically, in that instance, if one of the owners dies.

Tenancy By Entirety

Some states allow joint ownership of a property by a married couple, called tenancy by the entirety.  In this type of ownership, an owner cannot make a decision about the property without the other’s consent.  As with joint tenancy with right of survivorship, each of the married partners has full right to the property should the other one die.

Living Trust

Property can be transferred into a living trust, which can reduce taxes on the estate in the event of the owner’s death.  However, there is some cost to setting up and maintaining the trust.  An estate attorney can assist in establishing a trust.

Corporation Or Partnership

A corporation or partnership can hold title to a property.  Each has different rights and arrangements that affect the title.  Seek legal counsel in order to make an informed decision.

When going through the mortgage process, there may be some out-of-pocket expenses before you close.

  1. Earnest Money – typically $500-$2000+ depending on the purchase price of the home.
  2. Home Inspection – the cost is anywhere from $300-$500+ depending on the size of the home and other services requested such as radon, termite, etc.
  3. Appraisal Fee – typically, $495 and up.
  4. Homebuyer’s Education – If required, $75-$99.

Cash to Close – This amount varies.  Once you have a house picked out and your real estate professional has negotiated how much the sellers will pay towards your closing costs, a loan officer can dial this number in a little more.

Necessary Home Repairs Before Closing

Often, homes need major repairs before you can list them.  These include a faulty furnace, old roof or cracked foundation.  These typically cost between 2-3% of your home’s sale price per repair.  Sometimes, you can offer a Buyer’s Credit in lieu of completing the repairs yourself – this means you’ll pay a flat fee to the buyer at closing to cover the cost of a repair.

Optional Home Repairs Before Closing

Real estate agents may suggest some optional updates for your home in order to help it sell faster.  These could be something as small as repainting a few rooms to comply with new neutral trends, replacing carpeting, or even remodeling an entire room of your home.  Optional updates can cost between 2-15% of your home’s sale price per repair, depending on the project.

Closing Costs At Closing

Closing costs are made up of fees from several services:  the title company, attorney, credit report, appraisal and home inspection, among others.  Talk with a loan officer or real estate agent to determine your estimated closing costs.

Commission at Closing

Sellers are responsible for paying the commission when their house sells.  The commission rate will be determined by your listing agent.  This will be a percentage of the home’s final selling price.

Mortgage Balance At Closing

What you still owe your mortgage loan.

Property Fees At Closing

The outstanding amount of property taxes, HOA fees, and homeowners insurance due on your home.  These fees will be prorated at the closing date which means the cost will be adjusted based on the time you’ve lived in the home.  If you close in the middle of a month, you won’t have to pay the entire month’s fees.

Unpaid Bills At Closing

Like the property fees, your utility bills will be prorated to your closing date.  This includes your electric, trash pickup, gas, and water bills.

Buyer’s Credit At Closing

This cost varies depending on the home repairs that need to be paid for.  This is not applicable to all situations, and buyer’s Credits are optional.

List Price At Closing

What you hope to list your home for.

Selling Costs At Closing

All costs you’ve listed above.

Total Profit At Closing

Listing price minus selling costs.