When selling your home, there are several costs you should be prepared for. Here’s a breakdown of the key expenses:
1) Mortgage Payoff
Before closing, you’ll need to authorize the Title Company or Attorney to obtain the exact amount of your mortgage payoff. This will allow the closing company to prepare the necessary documents. At closing, the company will issue a check from your proceeds to pay off the outstanding balance on your mortgage.
2) Lines of Credit or Home Equity Loans
If you have any outstanding lines of credit or home equity loans, you’ll need to provide authorization for the closing company to gather the payoff information. Any remaining balance on these accounts will also need to be paid off, and the lines of credit will be closed as part of the closing process.
3) Prepayment Penalties
Sellers often assume that the only amount owed is what’s shown on the latest mortgage statement, but this isn’t always the case. Some mortgages have prepayment penalties for paying off the loan early. Additionally, you may owe prorated interest, depending on the timing of your closing date.
4) Unpaid Taxes or Liens
It’s essential to have title work done prior to closing to ensure there are no outstanding liens or unpaid taxes on the property. If any are found, they will need to be settled before the sale can proceed. The closing company will handle these payments directly from your proceeds.
5) Special Assessments
Special assessments are charges levied by local governments for things like water, sewer, road repairs, or other property-related improvements. In some cases, these assessments must be paid off before closing; in others, the buyer may agree to assume them. If the seller is responsible for paying them, the closing company will pay these fees out of your proceeds.
These costs will be deducted from the proceeds of your sale at closing, so it’s important to be aware of them ahead of time to avoid any surprises.
