Closing Costs & Loose Ends
Because financing is such a significant part of the buying process, it is best to know everything you can about it. Sometimes, however, there are unexpected costs to buying a home that you should be aware of (if these costs are intentionally hidden, however, the seller may be breaking federal laws). Some examples of loose ends that should be tied before closing day include:
Property taxes are pro-rated to the time of closing, and the amount of taxes due at closing will depend on how the taxing authority collects property taxes.
There may be liens against the property that have been ignored and they must be settled before closing can occur.
The current owner may want the buyer to pay the balance of a current sidewalk assessment that was being paid yearly with the taxes.
The financing source may include costs that were not mentioned such as document fees, courier fees, and the funding of an escrow account which includes taxes and property insurance that will be due before the monthly payment builds up enough money in the escrow account to pay them.
The finance company should have disclosed their “points” for originating a mortgage long before closing, but the amount of points may go up before closing.
Homeowner association dues are sometimes payable two months in advance for new homeowners.
However experienced you are in purchasing a home, be aware of potentially hidden costs, so there’s no surprises for you at closing time.