Wednesday, December 21, 2011

Getting a Handle on Closing Costs (Part 2)

SETTLEMENT COSTS GUIDE (SELLER)
(To be used for estimates only.)
  • Real Estate Brokerage Fee: Commission percentage charged x Sales Price.
  • Deed Preparation (aka Document Prep):  $150.00 - $175.00.
  • Revenue Stamps (aka Deed Stamps):  Revenue Stamps are placed on deeds wen transferring real property.  $3.70 per $1,000 of Sales Price.  Example:  Sales Price 250,500 (round up to the nearest $1,000increment) = 251,000.  251,000 X 3.70 = 928.70 or round up to 929.00.
  • First Mortgage Balance:  Ask Seller for this information.
  •  Interest n Arrears:  Interest in Arrears is the interest due for the following month.  The formula is the mortgage balance times the annual interest rate and divide by 365, then multiply by the number of days from the first of the the closing month until and including the day of closing.  This equals interest in the arrears.  Example:  Loan balance is $71,549.00 and interest rate is 6%.  $71,549.00 X 6% = 4292.94 which is the amount of interest paid in one year divided by 365 days = 11.76per day times 15 days = 176.42 for interest in arrears.  NOTE:  The above example is for a Conventional Loan.  FHA and VA do not prorate to the day of closing; instead charge for the entire two months.  (Check with lender.)
  • Second Mortgage/Other Liens (equity line):  Obtain from Lender or Seller's records.
  • Recording of Satisfaction of Mortgage:  Charged to record that the Seller's mortgage has been paid off $10.00 - $15.00.
  • Termite Letter, if applicable:  $100.00  (Seller has to pay for Purchaser getting a VA Loan.)
  • Pro ration of Taxes:  The tax pro ration is based on the previous year's taxes since the tax bill does not come out until the end of the year due.  Seller owes from January 1 through the day of closing.  The closing attorney must deduct taxes due from the Seller's proceeds, however this amount may be in the escrow account and reimbursed to the Seller by the lender after the payoff has been received.  Formula:  Last year's annual taxes divided by 365 days times days from January 1 - day of closing.  (Consult a Julian calendar for number of days.)  Example:  Closing is scheduled for May 15th .  Annual taxes are $1500.00 divided by 365 days = $4.11 per day times number of days (unless a Leap Year the number would be 135 days).  $4.11 times 135 days = $555.00.
  • Home Warranty (American Home Shield):  Depends on Coverage and additional options.  $400.00 and $550.00.
  • Purchaser's Transaction Costs & Pre-Paids:  If Seller agrees to pay in the Contract, see Transaction Costs under Estimated Purchaser's Cash Requirements.
  • Water and Sewer:  $30.00 - Some closing agents/attorneys prorate this at closing.
  • Miscellaneous:  50.00  (Photo, Fax Copies, Express Mail, etc.)

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