How to Buy a Home – What are Closing Costs

Real Estate Agent with eXp Realty of California, Inc. CA DRE #01490977

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.


Buyer HandbookMy “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.






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 costsClosing 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.


If you are relocating, check out my video series at Relocation Tips and Advice and my Relocation blog for helpful information.

Comments (10)

George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Jeff closing costs can be very different from lender to lender, especially if there are points involved.  It is important for Buyers/Borrowers to ask the lender for a Fee Worksheet or Loan Estimate up front so they can see ALL of the closing costs before they sign on the dotted line.

Dec 13, 2016 04:03 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

George Souto really has added some value to your already great post Jeff Dowler 

Dec 13, 2016 04:05 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi George Souto  - so true. And I have seen that with different lenders this year. Buyers sometimes don't even know what to ask or when.


Dec 13, 2016 05:18 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Paul S. Henderson, REALTOR®, Broker, Tacoma Washington 

Thanks for stopping by and for the compliment. I totally agree. I have found some buyers are really surprised about how much they have to pay in closing costs, but knowing early on is important for planning purposes.


Dec 13, 2016 05:19 PM
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

I've had the same experience you have with Closing costs varying so much this year - I think we're seeing it because now, they HAVE to disclose so, the buyers are researching more lenders than they did before.  Great information for buyers in your post, Jeff Dowler!

Dec 13, 2016 08:28 PM
Bo Kociuba
McGraw Realtors - Mustang, OK
Realtor - Mustang, Yukon & OKC Metro 405-812-1572

Great information for the buyers Jeff! All readily available in one place ...

Dec 13, 2016 09:40 PM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Jeff, I always give a 'net sheet' when listing a home and with buyers ensure that they understand all the costs.  All the lenders I work with are great on doing this anyway but when they go off on their own & tell me their closing costs (that are too high)...well it is time to change lenders!

Dec 14, 2016 04:46 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Debe Maxwell  - it really is true, but I'm glad about the requirement. Buyers often do no even know the questions to ask about closing costs and how much they might be

Thanks Bo Kociuba & Buster Elliott  that was the intention.


Dec 15, 2016 05:31 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Ginny Gorman 

I always do the same as well. We can usually get pretty close with the estimates from the escrow company, and then what the lender must do. Sometimes it's a big eye opener!


Dec 15, 2016 05:33 PM