Closing Costs Cleared Up

Closing costs are the various fees and charges buyers face when purchasing a new home. Closing costs can accrue from lenders and third parties that are involved in your loan transaction such as escrow, home appraisers, and title companies.

There are some fundamental elements that contribute to the total amount of closing costs you will have to pay for your home purchase. These elements include the type of loan you choose, your down payment amount, the property type, and occupancy type.

Home buyers in California can typically expect to pay closing costs between 2% and 3% of their home’s purchase price, depending on price, discount points, transfer taxes, and other factors. This is an approximation. Most lenders ask that potential borrowers apply for a loan before receiving an exact breakdown of the closing costs they can expect to pay. There are two types of closing costs: Nonrecurring and Recurring.

Nonrecurring closing costs include the one-time fees that buyers pay only at the time of purchase. These can include Escrow fees, Title Insurance fees, Appraisal fees, Underwriting fees, Notary fees, Recording fees, Transfer taxes, Credit report acquisition fees, Mortgage origination fees, and Processing fees.

Recurring closing costs include any fees that will recur after the purchase of your home closes. These can include Prepaid interest, Property taxes, Hazard insurance, and HOA dues.

These are some of the closing costs that California homebuyers may experience. Depending on your own homebuying situation, you may have additional costs. In some cases, these fees may not apply to your closing costs.

The source for some of this information came from JVMLending – “Average Closing Costs for Home Buyers in California”