Closing Costs for the Buyer
Whenever Buyers consider purchasing a home they must consider what the purchase will cost them. Aside form the down payment, which is the difference between the amount to be borrowed and the selling price of the house, including the good faith deposit the Purchasers had paid at the time of contract, and which Purchasers understand they must pay, there are other fees involved.
Most of the Purchasers are paying cash for the property, the only fees are those to search and insure the title, pay an attendance fee to the Title Closer, pay the costs of recording the deed and pay the bill from their attorney. Generally, however, Purchasers will need to obtain mortgage financing in order to complete the transaction. The cost of this financing comes under the heading OTHER PAYMENTS
At the closing the Buyers will have certain other payments to make. These will be in the form of credits to the Seller for taxes and fuel. Taxes due on a property are paid at specific periods. Tax adjustments on properties located in the City of New York are easiest to figure since they are paid quarterly. Nassau County is the most difficult because the taxes for schools are paid partially in arrears, a situation that creates confusion for al parties concerned. In Suffolk County the tax year begins in December, not January, which can also cause some confusion, but not nearly the sort found in Nassau.
In any event, to give an example of a tax adjustment between Seller and Purchaser, let’s take a property located in Queens (notice I took the easy way out). Closing is scheduled to take place on the 1st of March. Taxes are $1,200.00 per year, or $300.00 per quarter. The first quarter was paid by the Seller on January 1st. The Seller was in title in January and February. The Purchaser will be in title in March. If the taxes are $300.00 per quarter, they are $100.00 per month. Therefore, the Purchaser owes the seller $100.00, which will be reflected as a credit to the Seller.
Fuel must be adjusted as well. If the property is heated by gas or electric, there is no adjustment. The Seller has a final reading, pays his bill, the Buyer puts the utilities in his name and the matter is settled. If, however, the house is heated with oil, the Seller has the tank read prior to the closing and the Purchaser pays him for any oil in the tank. This is reflected as a credit to the Seller.
Once all the credits and debits are tallied, the Purchase pays what he owes to the Seller, the Seller hands the Purchaser a deed and the keys, and the closing has reached a successful conclusion. The Seller takes the money and the Buyer takes the house. God’s in his Heaven, all’s right with the World.