Realestate-ese - What are Closing Costs
Buying a Carlsbad home is complex, and time consuming, whether it’s your first home or you are an experience buyer.
And there is lots to know and do in order to make it happen.
My “How to Buy a Home”tips and advice video series offers some quick answers to important issues and decisions you face as a home buyer, and questions you may likely have, when buying a new home in Carlsbad.
When you work with a real estate professional for your home purchase you have someone to look out for your interests, answer your questions, guide you through the home buying process, and help you find solutions to any problems that arise.
Here is some important information that you should know.
WHAT ARE CLOSING COSTS!
If you are financing the purchase of your new home you will need to provide a down payment as part of that purchase with the balance of the funds coming from a mortgage. It’s important to keep in mind for your financial planning that this down payment (it might be 5% or 10% or some other amount) is not the only money you need to have set aside. You will also have to pay closing costs (there may be some differences in other states depending on the purchase process).
Here’s a general summary of what you might expect – keep in mind fees can vary quite a bit depending on your loan, the lender, your financial situation, the purchase price, and other factors.
Closing costs include a wide range of fees, some of which are determined by your lender – appraisal fee (you will likely be asked to pay this upfront), credit report fee, points for the loan (if applicable), homeowner’s insurance, and pre-paid interest (calculated per day until our first payment) and property taxes (usually multiple months), among others.
Lenders are required to provide you with an estimate of these fees early in the loan process so you know what to expect, and then a final statement of fees in the Closing Disclosure a few days before closing. Be sure to ask your lender if you have any questions about these fees.
Here in California we use an escrow company, a neutral 3rd party, to manage the process between you and the seller once you have an offer acceptance – this company will manage all the paperwork that’s required, make sure the escrow instructions are followed, holds your deposit, and collects the down payment and loan funds before closing. There is, of course, a fee for this based on the purchase price.
Other fees include lender’s title insurance, a recording fee, a fee for a notary for loan documents, a pro-rated HOA fee (from date of closing to end of month) and 1 month advance HOA fee (if applicable), and other miscellaneous fees. I provide an estimate that I obtain from escrow early on, so that in addition to the information from the lender the buyer has a pretty good estimate of closing costs. Be sure to check with your Realtor and the escrow company with any questions.
If I can help you think through your home buying requirements, and your wish list, in light of your budget and other factors, and answer all your questions about closing and your responsibilities, please give me a call or text me at (760) 840-1360. Then we’ll get started on finding you the right home and get you into escrow!
Visit Home Buying Tips and Advice for my YouTube Channel playlist of short videos on how to buy a home, then give me a call (760-840-1360) to discuss your home buying needs and questions that you have.