Closing costs of the costs involved to buying and selling a house. They include escrow, title insurance, courier fees, appraisal and lending fees all lumped into one large sum. Usually, if you’re buying a house, your lender will give you a good faith estimate stating all closing costs as close as possible to the actual number. When the time gets a little bit closer to closing you get a more accurate number but it shouldn’t be too much different than your initial estimates. Interest rates may have changed, down payments, certain figures or discounts may come into play often than not, lenders will need to give you as close of an estimate as possible however, there are unanticipated and unexpected closing costs that can be involved. Buyers and sellers need to pay closing costs and they do differ based on which party you are a part of.
The buyer typically pays the most closing costs and if the buyer is financing the property instead of paying all cash, the closing costs can be more.
Here are just some of the things that can be included in a buyers closing costs.
- Mortgage processing fee
- Appraisal report
- Credit report
- Tax monitoring
- Escrow company fees
- home inspection (if not paid directly to home inspector)
- Title search
- Tax transfer fee
- Prorated property taxes
- Homeowner insurance premium
- Property deed recording fee
The seller also pays specific closing costs but are different then the buyer. These may include:
- Escrow fees if the buyer did not pay all
- Fees potentially associated with paying off the mortgage
- Any repairs to the home
- payoff for any liens
- real estate sales commission
- Home warranty if applicable
- Preparation and recording fees
- attorney fees in states where attorneys are normally part of the closing (not common in California)
Depending on your location and where you are buying, buyers may also have to pay for flood or certain hazard insurance premiums. If you are not buying in a location where flood insurance is required you won’t need to pay this additional cost. Underwriting fees, recording fees and loan origination fees are also typically included in the closing costs bundled with financing.
Sellers may be required to pay certain homeowner association fees or if not, it will need to be negotiated into the cost of the home and paid either in advance or for back payments either from the buyer or the seller. If the seller or homeowner did not pay for homeowners association fees there may be fines attached that the buyer will need to pay unless otherwise negotiated with the seller.
Closing costs are typically anywhere from 1% to 4% of the purchase price of the home and are typically between $4000 and $10,000 based on the price of the home, the cost of the loan an individual details and commissions. Commissions can also be negotiated so for a seller, if you’re not comfortable paying the full commission you can negotiate a lower price. This works especially well if the listing agent is also the buyers agent and the commission is not split between two agents.
For more information on closing costs in California, Irvine real estate or homes for sale and selling your home in Orange County California contact my office today.