Mortgage Education

The seller said yes—what happens when your home loan offer is accepted

Once you find the perfect home and your offer is accepted, you’ll move into escrow to close the deal on your house. You’ll meet with a representative of the escrow company who is handling all the final paperwork, and once the title is recorded, ownership will transfer to you.

Below are some of the typical fees that you (and the seller) will be responsible for paying at closing.  Please note that buyer and seller fees vary by County, so you should consult with your Realtor.

Buyer’s fees

  • Credit Report – One for each borrower to determine your creditworthiness.
  • Appraisal – This is a professional assessment of the home’s value conducted by a licensed independent appraiser.
  • Title – The title report will disclose whether there are any liens and encumbrances against the property that might prevent it from being sold (and any other title/escrow fees).
  • Title Insurance (based on the purchase price) – This insurance can protect the lender (lender’s policy) or the buyer (buyer’s policy) against loss arising from disputes over property ownership.
  • Recording Fees – The appropriate government agencies will record the transfer of property.
  • Courier Fees – All the documents involved with the mortgage process are transported between the escrow service and other entities.
  • Loan Origination Fee – These are sometimes referred to as “points”, and this fee results in a lower interest rate for the borrower by allowing them to pay more money to reduce their interest rate.

Seller’s fees

  • Escrow services (the seller’s portion)
  • Recording fee
  • Real estate commissions to the agent(s) representing both the buyer and seller

Escrow accounts

Escrow accounts were originally established during the Great Depression of the 1930s, when Americans were unable to pay their property taxes because they were unemployed. It was hard enough at that time to come up with the money to pay for food and clothing, let alone a large property tax payment.

Lenders and the government worked together to help keep people in their homes by attaching an extra payment every month to their mortgage payment, so homeowners could save for the property taxes a little bit every month. Escrow accounts were set up to hold that money in reserve, until it was time to pay the taxes. Collections for property insurance were also added, so that all houses would be covered in the event of fire or other hazards.

Escrow accounts still exist today, and may be required, or you may choose to have one for your convenience.

Learn more about mortgages on our Mortgage Resources web page.

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