When you sell or purchase a home, you might hear the term “prorations” being used. This is because some items may be prorated at the time of closing. Since you might be hearing this term at the time of closing, it is a good idea to gain a better understanding of what it means.
What Does the Term “Prorations” Mean?
When you close on a home, certain items may be prorated. This means certain items of monetary value may be divided between the seller and the buyer. These most typically include items such as:
- Insurance premiums
- Property taxes
- Rental Income
These items are not necessarily split equally. Rather, a specific proportion is determined and these costs are shared in accordance with the proportion.…