"Every new beginning comes from some other beginning's end." Semisonic
Before you close the door on your old place and start your life in a new one, there are - or at least seem to be - thousands of i's to dot and t's to cross. And one item that often gets overlooked when considering costs associated with moving is closing costs.
"The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the 'closing'." Hence, the term 'closing costs.' OK, we get that. But how much should you allocate when considering the costs of selling your home? That may not be as clear for some.
A general rule of thumb is to use ½% of the sale price to allocate for closing costs. This is a starting point, and you'll want to double check with an accountant about the potential tax implications.
The following is a list of some of the expenses that are typical at closing.
· Attorney Fees. You should always have an attorney represent you when you are selling a home or property. Attorney fees are for the review and negotiation the Purchase & Sales Agreement, drafting the deed and attending the closing.
· Stamp Tax. The stamp tax is $4.56 per thousand dollars of the sale price. For example, if the sale price of your home is $500,000, the Stamp Tax would be $2,280.
· Tax Adjustment. Since taxes are paid on a quarterly basis, you may either be credited or you may owe the buyer depending on timing. If that is the case, there will be an adjustment at closing for that specific amount.
· Mortgage Payoff. The bank attorney will pay off any existing mortgage(s) you may have and there are certain associated expenses.
· Recording Fees. There are nominal recording fees in which the Seller is required to pay at closing.
Again, these are typical seller-specific closing costs. Other fees may apply so be sure to check with your agent, attorney, and accountant for details.