Closing Costs Customarily Paid By The Buyer In Escrow


Legal Closing:

  • Standard or owner’s policy in some areas (usually a negotiable charge)
  • ALTA policy and inspection fee, if ordered
  • Escrow services
  • Drawing second mortgage (if used)
  • Notary fee
  • Recording fee
  • Recording deed
  • Other agreed-on charges

Financial Closing

  • Loan origination fee
  • Appraisal fee
  • Credit report
  • Drawing up note(s) and trust deed(s)
  • Notary fees
  • Recording trust deed
  • Tax agency fee
  • Termite inspection fee (if agreed on)
  • Interest on new loan (from date of closing until first monthly payment due)
  • Assumption fee
  • New fire insurance premium, one year prepaid, if applicable
  • For new FHA-insured loan, mortgage insurance premium (MIP), can also be applied if borrower doesn’t have required down payment.

Adjustments Between Seller and Buyer (depends on closing or other date agreed on)

  • Reimburse seller for prepaid taxes
  • Reimburse seller fore prepaid insurance
  • Reimburse seller for prepaid improvement assessment
  • Reimburse seller for prepaid impounds (In case buyer is assuming and existing loan)
  • Other occupancy adjustments

Reserves (impounds) Limitations by Real Estate Settlement Procedures Act (RESPA) – Variations

  • Any variation from custom in closing a transaction should be agreed on in advance.  Some times through sheer bargaining power, one party can demand relief from and be relieved of all or some of the customary charges and offsets generally assessed.  The financial aspects of each transaction differ and should always be negotiated by the parties involved.
  • Accruals

    Unless agreed on in advance, interest-bearing debts are accrued up to the date of settlement and constitute a charge against the seller.

 For some “Terms” used in escrow

Source: California Department of Real Estate Reference Book