Paying off the existing first mortgage

The interest costs on your mortgage are adjusted from the date of your last payment to the date of closing. Also, check with your mortgage holder to determine if there is a prepayment penalty for prepaying your mortgage (there are no prepayment penalties on either VA or FHA mortgages.)

Other financing outstanding on your property

Home improvement loans, second mortgages, contracts for deed, mechanic's liens, tax liens or judgments...all of these may need to be paid at the time of closing.

Contract for deed discounts

If you sell your home and part of the buyer's payment to you is in the form of a contract for deed, the contract can be sold by you to third parties, but only at a discount (less than the face value). This rate fluctuates with the money market.

Special assessments of record

These are usually paid by the seller, but the buyer may be asked to pay this cost or agree to assume it. If your home is sold with new financing, you may well be asked to pay the specials since most lenders will not mortgage a home that has an assessment against it. (This does not include annual special assessments for such things as lighting, park board, garbage pickup, etc.)

Pending special assessment

Provisions usually must be made for the payment of pending special assessments at the time a new mortgage is written. Since the exact cost of a pending special has not yet been established, lenders require that either the buyer or seller deposit two times the estimated amount into an escrow account until the exact cost has been established. At that time, the specials will be paid and the extra funds in the escrow account returned to whoever paid them. Closing such an escrow account sometimes takes as long as one year.

State deed taxes

This is established by the selling price of the home, and the rate is $3.30 for each $1,000 of purchase price.

Balance of real estate taxes due at closing

Check with your lender to determine this figure if your taxes are escrowed.

Placement fee

This is the points which need to be paid to a lender to get new financing for your home.

Buyer's closing cost

In some instances, buyers ask sellers to pay their closing costs for new financing. This fee is in addition to the mortgage placement fee

Other costs

These are sometimes incurred as a condition of your property when qualifying for new government financing: survey, water test, bringing your electrical service up-to-date, making necessary plumbing repairs or repainting the exterior and/or interior of your home.