Closing or settlement costs are an accumulation of charges paid to multiple entities for the professional services associated with buying real property.
Here is a quick guide on who pays what at the close of escrow:
What Sellers can generally expect to pay for:
- Owner’s Title Insurance Policy premium
- Real Estate Commission
- One-half of the escrow fee (charges for services/documents by escrow to transfer title)
- Any loan charges required by Buyer’s lender specified in contract
- Pay off charges plus any fees, penalties and interest on loans made by the seller
- Repair work specified by purchase contract
- Encumbrances of record against the Seller
- Prorated property taxes and or delinquent taxes to date of close
- Unpaid HOA dues or assessments of record
- HOA transfer fee
- HOA Disclosure Statement
What Buyers can generally expect to pay for:
- Lender’s Title Policy (insures new lender’s lien position)
- One-half of the escrow fee
- All new lender charges (document preparation, appraisal, loan origination, credit report, points, underwriting fee, etc.)
- Recording fees for all buyer documents
- Prepaid interest on the new loan
- Hazard Insurance premium and impounds
Source: First Arizona Title Agency – Home Buying Guide