Construction Loan

There shouldn't be much duplication. The big closing costs are the mortgage tax, title insurance, prepaid items like hazard insurance and pre-paying taxes, interest, etc. as required by your lender.

Paying cash will avoid the mortgage tax and the pre-paid items during the first closing but you will pay the during the second closing. Your lender may require more hazard insurance than you decide to purchase on your own or may have specific requirements for the insurance but you should be able to find that out ahead of time. Either way, you won't pay twice.

When you buy title insurance you won't need to buy the lender's policy because there is no lender. So you will just buy the owners policy. However, this is the one item that they may try to charge you some additional amount since you are not buying both policies together. I would ask your lawyer to inquire with the title company if there would be any additional charge and also if there is any way around it if there is, i.e. if you close on the loan within 30 days or if you buy the lender's policy before closing on the loan.

Other than that the only thing I can think of would be your lawyer's time if he is needed to close on the loan. If it requires a second closing you may have to pay him to attend again but often closing on a loan can be done without your attorney present.

Posted by: Anonymous at August 7, 2007 8:00 PM