Question about closing costs UPDATED with another ?

When we signed the contract the other day our lawyer gave us an estimate of the closing costs. I feel like somethinig might be off and I dont want to be surprised at Closing.

The sellers already paid the taxes for this coming school year. So, according to our attorney we would reinburse that amount of taxes that they already paid, plus pay for the county taxes for next year. A total of $7,000 in taxes. However, I was under the impression that we ALSO had to put a year's worth of taxes in escrow (which would be another $7000). He did not put this in the closing cost estimate though. Am I incorrect? Is it just next year's taxes that we're paying at closing (the reinbursement of what the seller's just paid)? Or is the lawyer forgetting and are we going to be surprised at closing with another fat bill for an extra year of taxes?

ETA: If it helps any, we'll be closing at the end of September. School taxes are due at the end of August (seller just paid them) and County taxes are due in October.

UPDATE: Okay, another question...on our estimate its also listed that we are paying the fee for our lawyer and then a fee for the seller's lawyer. Is this common practice? That the buyer pays for the seller's lawyer fees?

Message edited 8/16/2011 1:07:36 PM.

Re: Question about closing costs (specifically taxes)

I think it varies by location but, we were told when we closed we'd have to keep a years worth of taxes in escrow.

So based on that, it would be $7k plus whatever you needed to pay back the previous owners. It isn't the same though in each county - some counties only make you keep a few months in escrow (there was a debate between our mortgage broker and our attorney because they were in two separate counties as to what was correct).

Re: Question about closing costs (specifically taxes)

You have to pay them back for the time they payed for that you are now using..I closed end of October..taxes due in December..I had to pay seller back for 2 months of taxes and put next 6 months of taxes in my escrow which was paid in December. I wasn't requred to keep a year only 6 months.

Re: Question about closing costs (specifically taxes)

Re: Question about closing costs UPDATED with another ?

Ok, Here's how it works as far as escrows:

They take your total tax payment for the year and divide it by 12. That's how much they will collect from you monthly. You will need to pay the full year up front at closing, because they are due within 60 days of the closing. Then by October 1, 2012, they will need the full tax amount in escrow so they can make the payment for you. they also like to keep a 2-3 month "cushion" in the account. So, if you close in September and taxes are due in October, your first mortgage payment won't be until November 1st. November-September is 10 months. that will be in escrow by september since you'll be paying it monthly. then you need the other 2 months to make up the full year + a 2-3 month cushion. So, they will escrow at closing for 4-5 months of escrow payments.

i hope that makes sense. Let me know if not and I can try to explain better.

Re: Question about closing costs UPDATED with another ?

Re: Question about closing costs UPDATED with another ?

Re: Question about closing costs UPDATED with another ?

Re: Question about closing costs UPDATED with another ?