on December 18th, 2010
Fire/Hazard Insurance & Flood Insurance
Fire/Hazard Insurance and Flood Insurance (if any) are paid for by the buyer.
Escrow, Recording, and Courier Fees
These fees are generally split between buyer and seller, with the one exception that with a VA loan, the VA requires the seller to pay for them.
Title Insurance
The Homeowners’ policy is issued and paid for by the seller, protecting the buyer against title defects. The lender’s policy is generally required by the buyer’s lender and paid for by the buyer.
In Closing
Depending on the type of transaction some of these fees will not apply, and others I have not mentioned might show up on your settlement statement. Talk to your real estate agent and/or escrow officer/attorney to get the specifics on your transaction.
on December 17th, 2010
Prepaid Interest
Interest is paid in arrears, meaning it accrues from the first of the month till the end of the month. Then, on the first of the next month, you pay the bill. Prepaid interest is the portion of interest, collected at loan closing, which covers the time period between funding and the beginning of the first 30-day period covered by the first payment.
For example; if the loan closes on the 20th of January, your first payment will not be due until the first of March, at which time you will pay the interest for February. At the time of closing you will have to “prepay” the interest from the 20th till the end of January.
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on December 16th, 2010
Impound Account (property taxes and insurance)
If you agreed to a PITI payment (principal, interest, taxes and insurance) the lender will collect the taxes and insurance from you on a monthly basis and park that money in your impound account. The lender will then pay your taxes and insurance bill when due.
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on December 15th, 2010
Appraisal Fee
Since it is the buyer’s lender that requires an appraisal, this is paid for by the buyer.
Credit Report Fee
This is a fee charged by the buyer’s lender to pull the buyer’s credit report and is also paid for by the buyer.
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on December 14th, 2010
Loan Origination Fees & Discount Points
You can think of the loan origination fee as the commission your lender charges to prepare the documents and process the loan.
Discount points are money that you put up to pay down the interest rate, it is a form of pre-paid interest, one point equals one percent. Both fees are paid by the buyer.
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on December 13th, 2010
Property Inspection & Termite Inspection
Property Inspections as well as Termite Inspections are conducted at the buyer’s discretion and therefore paid for by the buyer. They are mostly paid directly to the vendor and not through escrow.
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on December 12th, 2010
Property Repairs
Property repairs in the sales process are generally requested by the buyer and paid for by the seller.
Document Preparation Fee
This fee is charged by the buyer’s lender for drawing up the loan documents and is paid for by the buyer.
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on December 11th, 2010
Property Taxes
Property taxes are levied once per year by your county assessor and paid twice per year. In the closing transaction they are prorated. This means the seller pays the taxes until the day of closing and the buyer pays them from thereon forward.
Home Owners’ Association Fees
Any HOA Transfer Fees are customarily split between both parties, and HOA Disclosure Fees are generally paid by the seller.
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on December 10th, 2010
Existing Loan Payoff (including existing prepayment penalties) & Re-conveyance Fee
If the seller has an existing mortgage on the property, this loan needs to be paid off before title can be transferred to the buyer. Generally, the seller will use the buyer’s funds to pay off this loan and keep the difference, if any.
When the loan is paid off, the lender will issue the seller with a Deed of Re-conveyance, thereby releasing the seller’s debt obligation. The existing loan is naturally paid off by the seller.
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on December 9th, 2010
Broker Commissions
Sales Commissions are paid for by the seller in a traditional set up where the seller hires a listing agent to list his/her property for sale. The listing agent then pays the buyer’s agent part of that commission.
There are situations where the buyer will pay his or her agent, for example on a property that is for sale by owner (FSBO) where there is no listing agreement in place.
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