Escrow & Title
In Colorado, 'proration' at closing refers to:
AA. The lender's fee for processing the loan
BB. The allocation of ongoing expenses (like property taxes and HOA dues) between buyer and seller based on each party's period of ownership✓ Correct
CC. The title company's commission
DD. The buyer's portion of the agent's commission
Explanation
Prorations at closing divide recurring costs (property taxes, HOA dues, rents, prepaid insurance) between the buyer and seller based on the number of days each party owns the property during the billing period. In Colorado, the closing date is typically charged to the seller (seller owns through close of business on the day of closing).
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Key Terms to Know
Proration
The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Math Concepts
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