Verify Escrow Payment Details Before Closing

Closing on a home involves a flurry of paperwork, but the escrow payment details are among the most critical numbers to verify. This guide walks you through confirming that the amount you owe at closing matches your purchase agreement, lender disclosures, and the final settlement statement. You’ll need your Closing Disclosure (CD) or HUD-1, your purchase contract, and any escrow deposit receipts.

What You’ll Need

• Closing Disclosure (CD) or HUD-1 settlement statement
• Purchase agreement and any amendments
• Lender’s Loan Estimate (if applicable)
• Escrow deposit receipt(s) from your earnest money
• Bank statements or wire transfer confirmations
• Calculator or spreadsheet for adding columns

Step-by-Step

1. Locate the key sections. On the Closing Disclosure, find Section H (the summary of escrow payments) and Section K (the cash-to-close breakdown). On a HUD-1, look at lines 100-140 for seller credits and lines 200-210 for buyer charges.
2. Compare the purchase price. Confirm the price on the CD matches your signed purchase agreement. If there were price adjustments (e.g., for repairs or appliances), ensure they appear as credits or charges.
3. Review the earnest money deposit. Check that the amount you paid into escrow is listed as a credit to you. It should appear as a negative number (reducing what you owe) in the cash-to-close section.
4. Check the loan amount and down payment. The loan amount on the CD should match your approved mortgage. Your down payment is the purchase price minus the loan amount and any seller credits. Verify it matches your lender’s expectations.
5. Itemize closing costs. Go through every line item in Section H: origination fees, appraisal, title insurance, recording fees, and prepaid items like property taxes and homeowners insurance. Each should match the estimates in your Loan Estimate (within tolerance) or be a legitimate change with proper disclosure.
6. Verify prorated taxes and HOA dues. Ensure the proration dates are correct (usually the day of closing) and the amounts are calculated per the county or HOA’s actual figures. A common error is using last year’s tax bill.
7. Confirm seller credits and concessions. If the seller agreed to pay a portion of your closing costs or buy down your rate, that credit must appear in Section J or as a negative number in the seller’s column. It should reduce your cash-to-close.
8. Add up the totals. Manually add all buyer charges, subtract your earnest money and any seller credits, and compare the result to the “Cash to Close” figure. If they don’t match, there’s an error.
9. Check the wire instructions. The final payment must be wired to the correct title company or escrow agent. Confirm the bank name, routing number, and account number with your title company directly—never rely on email instructions alone.
10. Sign only after you’re satisfied. If everything matches, you can proceed. If not, do not sign until the discrepancy is resolved and a corrected CD is issued.

Common Mistakes

• Assuming the earnest money is automatically applied—sometimes it’s listed as a separate line and can be forgotten.
• Mixing up the buyer and seller columns on the HUD-1, especially when credits are involved.
• Not checking the proration date—if the date is off by a few days, the tax credit can be wrong.
• Overlooking the “paid outside of closing” (POC) items, which are payments made directly to vendors and may not be in the cash-to-close total.
• Ignoring changes from the Loan Estimate—lenders are allowed some variance, but you should understand why the numbers changed.

Tips

• Ask for the Closing Disclosure at least three business days before closing. This is a legal requirement for most mortgages, giving you time to review.
• Use the “Closing Disclosure Explainer” from the Consumer Financial Protection Bureau (CFPB) as a guide—it walks through each line.
• Bring a calculator and a highlighter to the closing table. Mark any line that doesn’t match your expectations.
• If you’re wiring funds, do a test wire of $1 first to confirm the account is correct, then send the full amount.
• Keep all receipts and confirmations in one folder, including the earnest money deposit and any wire transfers.

Troubleshooting

If the cash-to-close is higher than expected: First, check if the earnest money was applied. If not, ask the closing agent to correct it. Next, compare each fee to your Loan Estimate. If a fee increased by more than the allowed tolerance (e.g., origination fees can’t increase at all), you may be entitled to a refund.

If the wire instructions seem suspicious: Call the title company using the phone number on their official website or a previous statement. Never use the phone number in the email. If you suspect fraud, contact your bank immediately to stop the wire.

If the prorated taxes are wrong: Request the actual tax bill from the county assessor’s office. The closing agent should use the current year’s assessed value and tax rate. If they used last year’s, ask for a corrected CD.

If the seller’s credits are missing: Refer to your purchase agreement. If the seller agreed to pay a specific amount toward your closing costs, that must appear as a credit. If it’s not there, ask the closing agent to add it before signing.

If you can’t get a corrected CD before closing: You have the right to delay closing. Most lenders will allow at least a one-day postponement to fix errors. It’s better to delay than to sign with incorrect numbers.

Frequently Asked Questions

Q: What is the difference between escrow payment and closing costs?
Escrow payment typically refers to the earnest money deposit or the escrow account for taxes and insurance. Closing costs are the fees for services like title search, appraisal, and loan origination. Both are part of your cash-to-close.

Q: Can I negotiate the escrow payment amount?
The earnest money amount is negotiated in the purchase contract. The escrow account for taxes and insurance is set by the lender based on estimated annual costs—you can’t change that, but you can shop for cheaper insurance.

Q: What happens if I find an error after closing?
Contact the closing agent and lender immediately. If it’s a calculation error, they may issue a refund or a correction. If it’s fraud, contact law enforcement and your bank.

Q: Is the earnest money refundable if I back out?
It depends on your contract and the reason for backing out. If you have a contingency (like financing or inspection) and you follow the proper steps, you usually get it back. If you simply change your mind, the seller may keep it.

Q: How do I know if the wire instructions are legitimate?
Always verify by calling the title company directly using a number you’ve independently confirmed. Be wary of last-minute changes or emails with different instructions.

Q: Do I need to bring a cashier’s check to closing?
Most transactions require a wire transfer or cashier’s check for the exact amount. Personal checks are rarely accepted. Confirm with your closing agent in advance.

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