What Costs Are Related to the Sale
Mortgage Payoff
Before the closing, you will sign a release for the title company or attorney to get the amount that will be owed on the day of closing. This will allow the closing company to prepare the closing documents, and they will issue a check out of your proceeds at the closing to pay off your outstanding mortgage.
Lines of Credit or Equity Lines
As with the mortgage payoff, you will have to authorize the closing company to get this information. If there are any amounts owed, they will also be paid off, and any lines of credit closed.
Prepayment Penalty
Often, sellers think that all that is owed is the amount showing on their last statement. This is not always true. A prepayment penalty could be in your mortgage. You may also owe interest depending on the day of the month that you close.
Unpaid Taxes or Liens
This is why title work is important prior to closing: to see if there are any liens or unpaid taxes on the title. These items will also have to be paid on the day of closing. The closing company cuts these checks out of your proceeds and pays them on your behalf.
Special Assessments
Special assessments are things like water, sewer, road, or other local government improvements that were assessed to the property. In most cases, they must be paid off; in others, they can be assumed by the buyer. If they are to be paid off, the closing company will pay these out of your proceeds.
