Understanding Your Closing Statement
Understanding Your Closing Statement was provided by Allan Erdy Escrow 15374 Ventura Boulevard, Sherman Oaks, CA 91403-3001 Telephone: (818) 501-5555 Fax: (818) 501-7438
Your Closing Statement
YOUR CLOSING STATEMENT IS "IMPORTANT": When your escrow has closed you will receive a closing statement which is a summary of the costs and financial settlement of your real estate transaction. This closing statement will be important for future tax needs and other possible considerations.
Escrow Number: The escrow number assigned to your transaction.
Reference: Gives the address of the property which is the subject of the escrow.
Closing Date: The date the documents are recorded or delivered. "Close of Escrow".
TOTAL CONSIDERATION: Total amount being paid for the property (sales price).
DEPOSIT: Amount of funds deposited in the escrow (All deposits are detailed separately).
Existing and New Encumbrances
FIRST ENCUMBRANCE: The amount of the Buyer’s new loan.
PURCHASE MONEY DEED OF TRUST: The amount of the loan being carried back by the Seller.
EXISTING LOAN OF RECORD: The unpaid principal balance of the existing loan which is being assumed or taken "Subject To".
RESERVE: Extra funds requested by escrow holder as a "reserve" in case any closing costs change. Any funds remaining are refunded at close of escrow.
Procedure wherein monetary adjustments are made between Buyer and Seller. Items prorated are usually:
FLOOD AND EARTHQUAKE INSURANCE
HOMEOWNERS’ ASSOCIATION DUES
LOAN TO BE PAID OFF: The name of the lender being paid off and the unpaid "principal" balance owing on the loan.
INTEREST: The rate of interest or daily interest charge and the dates the interest charge cover (Remember - loan payments you make cover the previous months’ interest).
RECORDING FEE: Charged by lender to record documents with the County Recorder’s Office (i.e.: reconveyance).
RECONVEYANCE FEE: Charge to issue a "Full Reconveyance" document which is evidence that the Deed of Trust affecting the subject property has been paid in full and that the lender and trustee no longer have any interest in the property.
PREPAYMENT FEE: Penalty charge for early payoff of the loan pursuant to the terms and conditions of the note.
LATE CHARGE(S): Charge assessed by lender in connection with any payment(s) received late (after grace period).
STATEMENT/FORWARDING FEE: Charge by lender for the preparation of a statement setting out the loan payoff requirements.
New Loan Charges
INTEREST: The rate of interest or daily interest and the dates the interest charge covers. This expense is referred to as "prepaid interest" and usually covers interest from the date your new loan is funded to 30 days prior to your first payment due date.
CREDIT REPORT: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you.
APPRAISAL FEE: This charge pays for an appraisal report made by an appraiser.
DISCOUNT POINTS: Also often called "points" or "discount points," a loan discount is a one-time charge imposed by the lender or broker to lower the rate at which the lender or broker would otherwise offer the loan to you. Each "point" is equal to one percent of the loan amount.
ORIGINATION FEE: Loan origination fee but sometimes called a "point" or "points". It covers the lender’s administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders.
DOCUMENT PREPARATION: Fee imposed by lender for production of Buyer’s new loan documents.
TAX SERVICE: A service contract required by lender which notifies lender of any property tax delinquency during the term of the loan (impound accounts are not exempted).
PROCESSING FEE: Charge imposed by lender for compiling data and information for submission to underwriter.
UNDERWRITING FEE: Charge imposed by lender for the services of their underwriter.
FLOOD CERTIFICATION FEE: Verification fee to determine if the property is in a flood zone.
WIRE FEE: Charge imposed by lender to wire transfer your loan funds to the title company for immediate credit.
MORTGAGE INSURANCE PREMIUM: Charge imposed by lender for a one year insurance premium which insures against loss due to foreclosure (generally required on loans made with a small down payment).
IMPOUND FOR TAXES: Initial amount necessary to establish an account held in trust by the lender in which the borrower is required to place monthly deposits for future payment of property taxes.
IMPOUNDS FOR INSURANCE: Initial amount necessary to establish an account held in trust by the lender in which the borrower is required to place monthly deposits for future payment of hazard (fire) insurance.
IMPOUNDS FOR MORTGAGE INSURANCE: Initial amount necessary to establish an account held in trust by the lender in which the borrower is required to place monthly deposits for mortgage insurance.
P.O.C. - PAID OUTSIDE OF CLOSING: Fees paid from the actual Lender to the Mortgage Broker outside of escrow (i.e.
Yield Spread Premium, Servicing Rebate, etc.). Also, fees for credit reports and appraisals paid prior to closing.
FIRE INSURANCE: The first year’s premium for hazard insurance (may also include homeowners and/or earthquake coverage) as obtained by the Buyer and required by lender.
PEST INSPECTION/WORK: Cost of a termite inspection fee and work completed, if any, per contract.
HOMEOWNERS ASSOCIATION (HOA) STATEMENT FEE: Fee charged by the Homeowners’ Association to issue their statement reflecting the current status of dues paid, pending assessments and any requirements for transfer to Buyer.
TRANSFER FEE: Fee assessed by the Homeowners’ Association (Condominiums) to update their records to reflect new property owner(s).
DOCUMENT FEE: Fee assessed by the Homeowners’ Association (Condominiums) for providing any requested Homeowners’ Association Documents. (If Seller does not have a complete and current set of Condominium Documents, then escrow holder must request such documents from the Homeowners’ Association at the Seller’s expense).
COMMISSION: The total dollar amount of the real estate broker’s sales commission. This commission is typically a percentage of the selling price of the home.
CERTIFICATE OF COMPLIANCE: Fee paid to City of Los Angeles in connection with the filing of the "Water Conservation Certificate".
CITY REPORT FEE: Fee paid to City of Los Angeles, Dept. of Building & Safety to issue their report regarding permits, certificate(s) of occupancy, impact hazard glazing, etc.
PROPERTY DISCLOSURE REPORT: Disclosure reports indicating whether property is located in earthquake areas, flood zone, fire area, etc.
PROFESSIONAL SERVICES FEE: Fee paid to Real Estate Broker(s) for additional costs of processing paperwork.
RETROFITTING: Cost for installation of smoke detectors, water heater bracing, impact hazard glazing, low flow shower heads and low flow toilets.
HOME PROTECTION POLICY: Policy with varying coverage’s which may include the plumbing, electrical, heating, air conditioning, water heater, appliances, pool etc. located at the property.
OWNERS TITLE POLICY: Charged by the title company for the Title Insurance Policy which insures title as transferred to the Buyer free and clear of all items except those provided for in the escrow.
LENDERS TITLE POLICY: Charged by the title company for the Title Insurance Policy required by the Buyer’s new lender.
TAXES/TITLE COMPANY: Any real property taxes which are paid through escrow.
SUB-ESCROW FEE: Charged by the title insurance company to cover their bookkeeping costs when they are required to handle money, either for the payoff of the Seller’s existing loan(s) or in the receipt of funds from the lender on the Buyer’s new loan.
RECONVEYANCE FEE: Fee charged by the Trustee on the Seller’s existing loan(s) for the issuance of a Full Reconveyance which must be obtained and recorded to show the loan has been paid in full (sometimes collected by lender - see PAYOFFS).
COUNTY DOCUMENTARY TRANSFER TAX: Charged by the County in which the property is located and is computed based on the sales price. (Currently $1.10 per thousand of the sales price in L.A County).
CITY DOCUMENTARY TRANSFER TAX: Charged by the City in which the property is located and is computed based on the sales price. (Currently $4.50 per thousand of the sales price in the City of L.A.).
RECORDING FEES: Fees charged by the County Recorder’s Office for the recordation of documents.
RECON TRACKING FEE: Paid to the title company to insure that the trustee prepares reconveyances in a timely manner and files same with the County Recorder.
TITLE/MESSENGER FEE: Messenger fees incurred by the title insurance company.
TITLE/WIRE FEE: Cost of wiring funds for loan payoffs and/or to the escrow holder.
ESCROW FEES: The base fee charged by the escrow company for its services. Escrow fees are determined by the amount of time and liability incurred in the transaction. Fees quoted are minimum fees for a transaction and if extraordinary time is required the fee would increase accordingly.
ORDER DEMAND STATEMENT: Charged for ordering, reviewing and processing of the payoff statements in connection with Seller’s existing loan(s).
ORDER BENEFICIARY STATEMENT: Charged for ordering, reviewing and processing of the beneficiary statement obtained in connection with any loan(s) being assumed by the Buyer.
ORDER HOA STATEMENT: Charged for ordering, reviewing and processing the statement needed from the Homeowners’ Association.
LOAN TIE-IN FEE: Charged for the additional work and liability incurred by the escrow holder in complying with the requirements of the lender for the Buyer’s new loan.
FEDERAL EXPRESS: Re-imbursement to escrow holder for actual Federal Express costs incurred.
DOCUMENT PREPARATION: Charged for the preparation/completion of various required documents in the escrow transaction.
NOTARY FEE: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them.
MESSENGER FEE: Re-imbursement to escrow holder for actual messenger costs incurred.