Linda Nelson January 27, 2022
It's almost closing day! As the purchase of the property is wrapped up, buyers and sellers will sign all final documents, funds will be disbursed, and keys will be handed over.
Shortly before the closing date, each side of the transaction will be provided with a document called the Draft Final Settlement Statement, which itemizes all the credits and debits charged during the transaction. This provides an opportunity to make sure all charges are correct and authorized for each side.
The Seller's Settlement Statement will list the purchase price of the property, as well as a few other items like the real estate agent commissions, mortgage loan payoffs, prorated taxes, utilities, escrow fees, and anything else associated with the home sale. Those items are then deducted from the purchase price, leaving a balance due to the seller, which is the seller's net proceeds.
The seller pays the real estate commissions for both the buyer's and seller's agents. Those charges will be listed under this section.
Property taxes and utilities will be prorated to the date the seller transfers the property to the new buyer, and money may be withheld to pay those bills and close them out.
Title and escrow fees associated with the transaction will be listed here and may differ for the buyer and the seller. On the seller's side, these may include the escrow settlement fee, title search fees, and the cost of the owner's title insurance policy.
State and local governments may charge excise or transfer taxes upon selling the property. If applicable, these may appear on the seller's statement.
Depending on the location, the seller may pay recording fees for certain documents.
For sellers, any existing mortgage on the property is paid off at closing. Mortgage payoffs will be listed with the remaining balance, as well as any prorated interest through closing day.
If the seller agreed to credit the buyer any monetary amount, it will be listed under the financial section.
This section might include charges for things like a lien search, surveys, additional signings, or fees for resale certificates, estoppels, and prepaid HOA dues for homes with a homeowners association.
The Buyer's Settlement Statement will list the purchase price of the property, as well as loan costs, prorated taxes, title and escrow fees, homeowner's insurance, seller credits, and anything else associated with the buyer's purchase.
Those items are then added together, and the loan amount, down payment, and earnest money deposit are deducted, leaving the buyer with a figure called the final cash to close. The buyer will then wire this amount to escrow at the end of the transaction.
The purchase price, earnest money deposit, down payment amount, and mortgage loan amount will be detailed here.
If the buyer negotiated any credits from the seller for repairs, closing costs, or other expenses, those will be credited in this section.
The loan costs section will detail any fees or charges associated with obtaining the loan, such as points (usually a percentage of the loan amount), loan processing fees, appraisal fees, underwriting fees, bank fees, credit report fees, and prepaid interest.
For the buyer, this might include prorated property taxes if the seller has already paid them up to a certain point.
Title and escrow fees associated with the transaction will be listed here and may differ for the buyer and the seller. On the buyer's side, these may include the escrow settlement fee and the cost of the lender's title insurance policy.
For the buyer, this section may include the county fees charged to record the documents needed to properly transfer ownership of the home.
If required by the lender, the homeowner's insurance premium will typically be prepaid for one year.
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