Mortgage Closing Costs
What are Sellers Closing Costs
When there is a closing, what are the sellers closing costs in the deal? Sellers too have costs related to the deal. In this article I will explain what some of those closing costs are. Of course the sale of your home is a big transaction. Included in that transaction will be some fees that the seller has to pay. These usually come out of the proceeds of the sale of the home. Here is a list of some of those costs:
- real estate agent commissions
- Recorded release of the sellers liens
- Remaining interest accrued on the sellers 1st and 2nd mortgages (if there is a second)
- Possible prepayment penalties
- Credit to buyer of unpaid property taxes
real estate agent Commissions
If you used a real estate agency to list and sell your home, then there will be a commission of 3 to 7 percent of the sales price. This commission becomes part of your closing costs and is subtracted from the monies you will be receiving at closing.
Recorded Release of the Sellers Liens
You may be wondering why this is necessary. It is only necessary if you still owe money on the property for sale. The mortgage company the buyer uses wants to be sure that there is free and clear title. So you have to provide proof that any liens on your property has been released. This is done by filing a lien release document for each lien (1st or 2nd mortgage). Then that document has to be recorded and there certainly is a fee for that. That fee is part of those mortgage closing costs the seller pays.
Remaining Interest Accrued This sometimes surprises the seller. Most home mortgages and 2nd mortgages interest are paid in the arrears. What that means is the payment you made on the 1st of the month paid the interest for the previous month. So depending on when the closing is set, usually there is interest that has accumulated and needs to be paid. These too are the sellers responsibility and will show up on the closing statement.
Possible Prepayment Penalties
Some mortgages have a prepayment penalty clause in them. If that’s the case with the mortgage the seller just paid off with the proceeds of the sale of the house, then you will see that penalty as a home loan closing costs for the seller. The penalty for this can vary with a fixed percent of the loan amount or the former lender will use a fixed amount. This fixed amount can be six months interest payments. Be sure to check on this possible fee. It can make a difference on when you, the seller, want the closing to be.
Credit to Buyer of Unpaid Property Taxes
Most property taxes are paid in the arrears. Each state may vary as to when they bill for these taxes. So depending on when you close and when the bill is due there may be some property taxes you owe and will have to credit the buyer for these. These costs will also show up on the statement as the sellers closing costs. There are other costs that could be included like an inspection fee, home warranty, or seller concessions agreed upon between the buyer and the seller that may be closing costs for the seller as well.
About the Author
Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about mortgage closing costs and other helpful information on their website, First-Time-Home-Buyer-Solutions.com.
what costs do you have when you switch mortgage brokers before closing on a house, in florida?
we went with a mortgage broker first and signed the intial paperwork, but not closing papers from the lender, we found out we had to pay pmi on the house, so we asked our bank if they could do a mortgage for us with no pmi or closing costs. How much can the mortgage company charge us if we went with the bank instead? we paid for the appraisal report already.
nothing, you just wasted the broker’s time. brokers are on commission so if you dont get the loan through them, they dont get paid. even if you hadn’t paid for the appraisal, most brokers won’t hold you to paying anyway. some will take a post-dated check for the appraisal in case you do what you did or they will make you pay a processing fee up front.
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