An Explanation of Costs You May Incur When You Sell Your Home

Paying off your 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.

Other financing outstanding on your property... Home improvements loans, second mortgage, contracts for deed, mechanic's liens, tax liens or judgments...all of these may need to be paid at the time of closing.

Special assessments of record... The seller usually pays these, 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 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 returned to whoever paid them. Closing such an escrow account sometimes takes as long as one year.

State deed tax... 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.

Points... These are points that need to be paid to a lender for the buyer to get new financing on your home. These fees are negotiated at the time of making the offer.

Buyer's closing costs... In some instances, buyers ask sellers to pay all or part of their closing costs for new financing (especially 1st time home buyers.) These fees are in addition to the above-mentioned points.

Other costs... Other costs that can be anticipated: Well water tests (if applicable), Septic inspections (if applicable), Electrical service compliance upgrading, work orders issued by the appraiser, and other repairs that may be necessary as the result of a home inspection ordered by the buyer.