How to Avoid Unexpected Closing and Escrow Costs

Surprises in escrow rarely come from one big mistake. They usually build from small items that were not reviewed carefully. With the right habits, you can spot questionable charges, protect your funds and make sure you receive credit for taxes the seller owes.

Review Your Loan Estimate and Closing Disclosure

Federal rules require lenders to give you two key documents: the Loan Estimate early in the process and the Closing Disclosure at least three business days before closing. Compare them line by line.

• Check that the loan amount, rate and monthly payment match what you agreed to.
• Look for fees that increased, and ask why.
• Confirm that the cash to close is consistent with what you were told.

If something changed, ask your lender for a written explanation before closing day, not at the signing table.

Spot Questionable Fees

Not every fee is a problem, but you should understand each one. Ask for clarification on charges that are vague, duplicated or unfamiliar:

1. Duplicate service charges, such as two fees that appear to cover the same task.
2. Unnamed "administrative" or "processing" items without a clear explanation.
3. Add-on services you did not request.
4. Third-party fees that look higher than expected. Ask whether you may shop for certain services.

Fees vary by lender and by company, and some of them are legitimate. The goal is clarity, not suspicion. We are happy to review a Loan Estimate with you and compare it against others.

Prevent Wire Fraud

Wire fraud is one of the most serious risks in real estate. Criminals may impersonate escrow officers, lenders or agents and email changed wiring instructions. To protect yourself:

• Never send funds based solely on emailed instructions.
• Call your escrow officer at a phone number you found independently, such as on the company's official site or an earlier document, to verify every detail.
• Be skeptical of last-minute changes or urgent requests.
• Use secure channels, and avoid sharing sensitive documents over unencrypted email.
• If something feels wrong, stop and call right away. Contact your bank and escrow officer immediately if you suspect a problem.

Understand Prorated Property Tax Credits

Property taxes in California are paid in arrears for the fiscal year of July 1 through June 30, with installments generally due November 1 and February 1. At closing, the escrow officer prorates taxes so each party pays their share.

For example, suppose the annual tax is $9,000 and the seller has not yet paid the portion covering the three months before closing. That is $9,000 times 3 divided by 12, or $2,250. The seller would typically credit that amount to the buyer, who would then pay the full installment when it comes due. Your actual proration depends on the closing date and what has already been paid.

Verify Prepaids, Credits and Payoffs

Before you sign, confirm that:

• Credits negotiated in your contract appear correctly.
• Your earnest money deposit is applied as agreed.
• HOA fees and any assessments are prorated properly.
• Insurance premiums match the policy you selected.

Ask your escrow officer to walk you through the final settlement statement. A few extra minutes can prevent months of regret.

Stay Organized

Keep all communications, document versions and deadlines in one folder, and respond promptly to requests. Many delays and fees come from missing paperwork. If you are unsure about a legal or tax question, consult a qualified attorney or CPA.

Next Step

If you are in escrow or planning an offer, use the free "Closing Fee Breakdown Worksheet" to organize your numbers and questions. Then tap Request Closing Review and we will help you go through your documents with a careful, fiduciary eye.

Thao DP Nguyen | Century Financial Group, Corp. | DRE #01499503 | Broker #01930905 | Global Estate Hub LLC