When Buyers and Sellers meet at the closing table, certain of the closing costs are called “adjustments.” These are costs wherein a Buyer reimburses the Seller at the closing table for fees advanced by the Seller to the benefit of the Buyer post-closing.

For example: if a house has an oil tank three-quarters filled with oil, the Seller brings to the closing table a reading from the oil company indicating the amount of oil in the tank and the cost of that oil at time of closing. The Buyer reimburses the Seller for the cost of the remaining oil since the Buyer will derive the benefit from the use of that oil after the closing.

Likewise when a Seller has paid the property taxes in advance on a house. A November 18th closing may demonstrate the Seller has paid property taxes through December 31st. Thus the Buyer will reimburse the Seller for those property taxes pro-rated from November 18th through December 31st.

Closing Adjustments are basically “hidden” closing costs since these costs are not disclosed on a Good Faith Estimate of Closing Costs. A Buyer should consult with their attorney for a detailed explanation of expected adjustments. Thus the Buyer can avoid any surprises at the closing table (as too often happens with these adjustments). When a Buyer works with an attorney who specializes in Real Estate, the exposure to such closing surprises is minimized as the attorney typically explains from the outset the expected Closing Adjustments.

Tags: Bronx mortgage, Closing Costs, FHA mortgage, First Time Buyer, New rochelle mortgage, PHS, PowerHouse Solutions, Real Estate attorney

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