The $1,382 reason to scrutinize your closing statement

small model of a house on top of mortgage documents

I've bought and sold enough houses to expect my closing statement to show all kinds of charges, most of which make little sense to me.

There is, for example, $9.50 for flood data services and $77 for tax services. (Whose taxes? What am I getting for these tax services? Nobody says.)

I've accepted these charges as part of doing business.

When my husband, Gary, and I purchased our current home through a short sale, we came to the closing table agreeing that, unless something was way out of line, we'd just sign the document and get our house.

With luck, this is the last piece of real estate we will ever buy.

We signed, and we signed. I pointed out that I wrote a book a lot lighter than this sheaf of paper we were signing.

No, we did not read every word like I tell people to do. That would have taken all night.

We did read every line of the settlement statement — the summary of every dollar amount that affects the transaction. It's a good thing we did.

Common Closing Costs

Down payment Loan origination
Points Home inspection
Appraisal Credit report
Private mortgage insurance Insurance escrow
Property tax escrow Deed recording
Title insurance premium Land survey
Notary fees Prorations on utility bills, property taxes
Source: National Association of Realtors

The first item that stood out was a $1,000 charge for the septic pump certification fee. We had agreed to pay the septic fee as part of the deal.

However, we had already paid it on our credit card. Gary pointed that out to the loan officer, who agreed that we should be refunded that amount. (We since have received a refund.)

Next, we read a line called "Buyer credit to seller for tax proration" for $1,382.52.

We asked the loan officer what that was, and she searched until she found an email from the short sale negotiator.

It said that Bank of America had agreed to the sale only if it received a certain dollar amount, and because the closing date had been extended, the property taxes that had accrued in the meantime were a problem. The negotiator suggested in the email the buyers should pay that, because it was "their fault" that the closing was delayed.

Because there was no explanation in the closing packet about the "buyer credit to seller," we couldn't close until someone hurriedly typed up an addendum and placed it before us for signing.

We were told that if we didn't sign, we would lose the house.

We already had quite an investment of time and money, including the $1,000 septic fee, so we signed.

Several people, including our loan officer, advised us that we would be able to get that money back later because it was illegal for them to add it at the closing table.

So far, however, we haven't had any luck.

Moral of the story: Read the closing statement, and make sure you understand every line.

Several people work on your closing file, and not all of them are familiar with what's been paid or by whom.

You may be able to resolve some surprise charges but not others, but it's always better to at least know where your money went than to close your eyes and sign.

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