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Closing costs are sometimes a matter of negotiation
By Edith Lank | Columnist
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Published: 7/3/2010 11:00 PM

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Q. Who normally pays for closing costs: the buyer or the seller?

A. State law may dictate whether the seller or buyer pays certain charges, but most often the division of costs simply follows local custom. The seller usually pays for the costs of proving clear title, which may involve a survey and a search of the public records, summarized in an abstract of title. The seller typically pays any state transfer taxes and broker's commissions. The buyer pays the costs of placing a new mortgage (application fee, appraisal, upfront interest points on the loan), recording the mortgage and deed in the public records, mortgage tax, title insurance and home inspector's fees where used. Each party pays for its own legal services involved in the transfer. Almost all of this can be changed if buyer and seller agree on some other arrangement. Many mortgage plans, though, set a limit on how much of the buyer's costs a seller might agree to cover.

Q. We owned two properties and had two mortgages with the same company. When we paid off one mortgage to sell the property, the lender marked the wrong mortgage as paid off. Now, the mortgage that was paid off is still listed as active. The mortgage that was not supposed to be paid off shows "Paid in Full" and has already been incorrectly recorded at the county records office. Even though I no longer have title to the sold property, am I still responsible for making payments on that mortgage that was supposed to have been paid off? Am I responsible for the mortgage that wasn't really paid off? How do we deal with the mortgage company to get this mess straightened out?

A. Report the problem promptly to the state agency that supervises mortgage lenders. More than one reader has told me that they got prompt attention by also sending a copy of the complaint to the president of their mortgage company. A librarian can help you find the right names and addresses.

Q. I'm in a situation. I bought a house about seven years ago and never lived in it. I helped a family member who has been living in the home and paying the rent. Now I want out, but I don't think they would qualify for a loan to take over. Can anything be done to get my name off?

A. Not unless your relatives can qualify financially to take over the loan or if they get a new mortgage and pay yours off. Otherwise, I think you're stuck. You signed a document taking responsibility for the debt, and only the lender can release you.

Q. I inherited a house in another state. It's been on the market (with the same Realtor) since July. I have kept it priced in the middle of the range of comparable houses, which has meant several price reductions. It's been staged and I'm keeping up with the landscaping. Other comparables have sold since last September in the upper end of the range. I understand that it's currently not a great market to be selling a house and that if your house doesn't sell, it's priced too high (and I'm about to reduce it once again). The marketing plan has been to list the house on Realtor.com and Trulia and to hold a lot of open houses. Is there something else that's fairly typical that my Realtor should be doing?

A. Assuming your house is multiple listed, you're getting just about everything you need. Changing Realtors won't help. If you listed the house for $2, it would sell in five minutes. All you have to do is find the price - somewhere between $2 and what you're asking - that will attract offers.

Q. I have created an unique property. I moved a historic home to my 11-acre farm and added a new addition. The bank that gave me a building loan says appraisers cannot find similar recent sales; therefore, I can't get a mortgage through them. Please advise me on what I should do to find someone that will finance my cool new home!

A. Your unusual property doesn't fit the standards set by the secondary market, which buys bundles of mortgages from lenders. You might, though, get a loan from a bank that's willing to keep its own money tied up. What you need is a portfolio loan. Talk with mortgage brokers who may know how to locate a lender. And do let me know if that works.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.