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Seller's Closing Costs

You can use this section as a guide, when looking at settlement services noting that various lenders may have different requirements and different fees.

Sales/Broker's Commission:
This is the total dollar amount of the real estate broker’s sales commission, which is usually paid by the seller. This commission is typically a percentage of the selling price of the home.

Items Payable in Connection with Loan:
These are the fees that lenders charge to process, approve and make the mortgage loan. They are customarily paid for by the purchaser but may be paid by the seller.

Loan Origination:
This fee is usually known as a loan origination fee but sometimes is called a "point" or "points." It covers the lender's administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.

Loan Discount:
Also often called "points" or "discount points," a loan discount is a one-time charge imposed by the lender or broker to lower the rate at which the lender or broker would otherwise offer the loan to you. Each "point" is equal to one percent of the mortgage amount. For example, if a lender charges two points on a $80,000 loan this amounts to a charge of $1,600.

Appraisal Fee:
This charge pays for an appraisal report made by an appraiser.

Credit Report Fee:
This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you.

Lender's Inspection Fee:
This charge covers inspections, often of newly constructed housing, made by employees of your lender or by an outside inspector.

Mortgage Insurance Application Fee:
This fee covers the processing of an application for mortgage insurance.

Assumption Fee:
This is a fee which is charged when a buyer "assumes" or takes over the duty to pay the seller’s existing mortgage loan.


Escrow Account Deposits:
These lines identify the payment of taxes and/or insurance and other items that must be made at settlement to set up an escrow account. At settlement it is usually necessary to make an adjustment between buyer and seller for property taxes and other expenses. For example, taxes which are payable annually and have not yet been paid when the settlement occurs will be due on the following December 1. Since the seller lived in the house for the first portion of the year taxes in the appropriate amount will be collected at closing and placed into escrow to cover the proportionate time period. The borrower is given credit for this amount at the settlement and the seller will pay this amount or count it as a deduction from sums payable to the seller. Similar adjustments are made for homeoner association dues, special assessments, and fuel and other utilities.

Government Recording and Transfer Charges:
These fees may be paid by buyer or by the seller, depending upon your agreement of sale. Transfer taxes, which in some localities are collected whenever property changes hands or a mortgage loan is made, can be quite large and are set by state and/or local governments.

Settlement or Closing Fee:
This fee is paid to the settlement agent or escrow holder. Responsibility for payment of this fee should be negotiated between the seller and the buyer.

Survey:
The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays the surveyor's fee, but sometimes this may be paid by the seller.


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