Friday, June 27, 2014

Recurring vs. Non-recurring Closing Costs

Recurring vs. Non-recurring Closing Costs

For a buyer, closing costs are everything outside of the purchase price that a buyer pays to complete a real estate transaction.

For a seller, closing costs are all the fees, except liens or encumbrances, that are deducted from the purchase price.
 Some examples of closing costs include documentary transfer tax; city / county transfer or property taxes; inspections; loan fees such as points and prepaid interest.
Costs or expenses in an escrow are classified as either recurring or non-recurring.
Recurring Closing Costs
Costs which the party pays at closing but will continue to pay after the escrow closes as the normal cost of maintaining the property.
  • Fire Insurance Premium
  • Homeowner’s Association Dues
  • Real Property Taxes
  • Interest on the New Loan

Non-Recurring Closing Costs (NRCC)
Costs which are charged ONE TIME ONLY as an expense of closing the transaction.

Title Company Expenses such as:
  • Title Insurance Premiums
  • Recording Fees
  • Endorsements to Title Policies
  • Sub-Escrow Fee which may be due Title Company
  • Reconveyance Fees
  • Documentary Transfer Tax
  • Escrow Fees
  • Notary Fees
  • Messenger Fees
In the case of a refinance:
  • Fees Associated With Making an Existing Loan Payoff
  • Transfer or Document Fees to a Homeowner’s Association
Lender’s Costs such as:
  • Appraisal
  • Credit Report
  • Loan Origination
  • Loan Processing
  • Document Fees
  • Tax Service Contract
In the case of a sale:
  • Real Estate Broker Commissions
  • Fees for Property Disclosures or City Reports
  • Transaction Coordinator Fee
  • Home Warranty Premium

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