What Debt Needs to Be Paid Off at Closing When Selling Your House?

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    Liens

    • Liens secured against your house require repayment at the closing of escrow. This includes items like mortgage loans or home equity lines of credit. You must also satisfy any existing mechanic's liens, judgments or other lien types that encumber the title to gain a clear title report.

    Taxes

    • It is also necessary to pay off any outstanding real estate taxes at closing. If you have any unresolved local property taxes or school taxes, you must pay these items before the transfer of ownership can take effect. Some states may require sellers to pay a portion of a buyer's transfer taxes. You will need to speak with a local title representative for specific details applicable to your location.

    Utilities

    • You must pay off any utility balances such as water bills, sewer bills, electric bills or invoices from other public services at closing. Outstanding bills for phone services, Internet service providers and cable television services should also be paid at closing. However, some communications companies may not report to the credit bureaus or create public records for past-due debts. If you fail to pay the amount owed on a communications bill, the buyer might be inconvenienced until he proves his purchase date of the house.

    Considerations

    • A seller should plan in advance to pay a few items ahead of the closing of escrow, such as outstanding payments due to landscaping companies, newspaper providers and fuel delivery services. At the closing of escrow, a seller typically pays items that a title clerk or mortgage lender deems as debts that he must pay at settlement. If the amount owed against your home is lower than the selling price, you can pay outstanding items from the anticipated sales proceeds.

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