There are a lot of things that go into purchasing your new home. As a result, your expenses can add up very quickly (especially, closing costs). However, the worst feeling in the world can be when you get your closing package.
You will almost always find that there are many fees and debits you likely weren’t expect.
I am going to solve that problem for you today. Knowing what types of charges will be on your closing documents will help you plan better ahead of time. As a result, planning ahead should hopefully provide with you the peace of mind you deserve.
If you have a loan officer helping you get a mortgage, your closing disclosure will cover most of your expenses. Regardless, I’m going to break down all of the credits and debits on the settlement statement from the title company that you can expect when purchasing your next home.
Under normal circumstances there are only really two major credits.
- Loan Amount – The loan amount is the amount the you as the buyer are borrowing from the bank to purchase the house.
- Seller Concessions – The seller concessions are the amount the seller is crediting to you. As a result, these proceeds of the sale go towards your closing costs.
Closing Costs Prorations/Adjustments
The buyer is charged these amounts to pay back the seller for amounts already paid. So, consequently that’s why they are pro-rated from the date of the closing.
- Association Dues – Any unused dues paid annually or monthly will be charged to the buyer and credited back to the seller.
- City/Town Taxes – This is also know as “summer taxes” in Michigan. You pay your summer property taxes in advance. They are due July 1st. Any unused amount is charged to the buyer and credited back to the seller.
- County Taxes – These are your “winter taxes” in Michigan. You pay your winter property taxes in advance. They are due December 1st.
- Title Charges & Escrow / Settlement Charges – The buyer is charged these amounts for services provided for the closing, along with the lender’s insurance policy is also included in this.
- Lender’s Title Policy – Your lender will require a Lender’s Title Policy or Loan Policy if you are getting a loan to purchase the home. This covers the lender from problems with the title.
- Settlement or Closing Fee – The title company charges the buyer this fee for actually closing their side of the transaction.
- Government Recording and Transfer Charges – These amounts are for the service of recording paperwork with the county. The title company is insuring the ownership of the property. Therefor, they also make sure that the ownership paperwork is recorded correctly.
Other Debits to Keep in Mind
- Record Warranty Deed
- Tax Certification
- Record Mortgage
Don’t hesitate to reach out to me directly, if you would like to obtain more information about what you can expect when it comes to your closing costs.