Sellers /On May 28, 2015

Selling Your Home - Payoffs and Insurance and Closing Costs...Oh My!

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When selling your home, there are many little details that need to be arranged after the contract has been ratified and you prepare to go to the closing table. Below are some commonly asked questions and their answers:

Q: I'm selling my home, when do I get my mortgage loan escrow balance, if there is any?

A: Your payoff lender will not deduct your escrow balance, if you have one, from the payoff statement. Rather, they will refund any balance due you some time after receipt of the payoff. In my experience this is typically two weeks to one month. You should make a note on your calendar and follow up because that can be a substantial amount of money depending on the timing of the payoff and the status of your escrow account.

Q: As a seller selling my home, when should I cancel my insurance?

A: Once you have received your proceeds check and deposited those funds then I think you are safe to cancel your homeowner’s insurance. The receipt of funds indicates the transaction has occurred and the deed transferring title been recorded.

Q: How are mortgage payoffs calculated?

A: The settlement agent will obtain a payoff statement from any lender who has a security interest in your home, and we are obligated to accept that figure (you may challenge it if you think it is wrong though). Many times sellers erroneously estimate their payoffs because they do not consider or understand that interest is paid in arrears on a house loan. For example, if you have a principal balance of September 1 but are closing on September 30, then your payoff will include accrued interest from September 1 through September 30. That amount of interest can be nearly the amount of your house payment. In addition, since the payoff does not arrive in the lender’s hand as of the day of closing we will add several days to account for transit and processing.

Q: As a seller, what are my closing costs?

A: By custom, and by standard contract in this area, sellers have very few intrinsic closing costs items, i.e. those normally paid by the seller. In addition, you may have contractually agreed to pay some or all of the buyer’s closing costs. As a seller, you will pay the real estate commission as agreed, you will pay grantor’s tax at a rate of one tenth of one percent of the sales price or assessed value, whichever is higher, you will pay the settlement agent fee of $250.00 plus the document preparation (deed, etc.) fee of $100.00, release fees at roughly $75 per loan paid off, and you will pay the cost of a termite inspection if required under the contract (and any other inspections). While they are not generally considered true closing costs, taxes and association dues are pro-rated at closing and may reduce the amount you will net in the sale.

Q: I'm selling my home. How long after closing can I expect to receive my proceeds check?

A: Closing occurs when all the requirements of the contract, the parties and the lender have been met, all the documents signed and delivered, and the transaction fully funded. Once these events have occurred the buyer’s settlement agent will update title and record the deed. Your proceeds should be available within 48 hours of that moment. Typically, buyer settlement agents record the next business morning following closing and seller proceeds are available later that afternoon, sometimes the next morning.

Are you thinking about selling your home? Email us at concierge@lizmoore.com, or click below, and we can prepare a complimentary analysis of market value for you – you just may be pleasantly surprised.

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Lynnette Tully

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Liz Moore & Associates is a boutique real estate agency renowned for having the region's top agents, with extensive market knowledge and local expertise that is only achieved through relentless training coupled with Liz's extremely high standards for professionalism. When you're buying or selling a home, experience matters.