What Are The Closing Costs Of Real Estate?
You’ve found the perfect property and a great mortgage loan with the best interest rate you can find. What’s next in the home buying experience? Signing the contracts and paying the closing costs. But what exactly are closing costs?
Here Is A List Of The Most Common Closing Costs:
- Titling Fees – These include the title search and title insurance fees. In California these costs are usually split by the buyer and the seller but can be negotiated to be paid by either.
- Recording Fees – The government charges a fee to record the change in ownership of the [city] real estate. This can be paid by either the seller or the buyer.
- Survey Fee – A survey fee can be required by the lender. It is a fee for the survey of the land or lot, and its structures, to determine that it matches the property description. Such a fee is rare or even non-existent, in tract home communities, which are the majority of houses in South Orange County.
- Mortgage Application Fees – Occasionally mortgage application fees are included in the closing costs, but usually are paid prior to closing by the buyer.
- Appraisal And Inspection Fees – Unless it’s a cash transaction, an appraisal is required by the lender to ensure that the value of the property is equal to that of the loan, and to make sure there aren’t any underlying problems that detract from the property value. These fees are usually paid by the buyer.
- Points – Points are equal to one percent of the principal of the loan. These discount points can be paid by the buyer to the lender to reduce the final interest rate of the loan.
- Brokerage Commission – The seller pays the listing real estate agent the brokerage commission fee for listing, showing the property, and handling the contract negotiations. The commission is usually a percentage of the sale price of the property, and determined in advance by the seller and the listing real estate agent.
- Underwriting Fees – The buyer pays underwriting fees to the lender to pay for the costs of determining if the buyer qualifies for the mortgage loan.
- Property Tax – County property taxes are usually prorated at the time of closing, with the seller paying his share up to the close, and the buyer prepaying his share, from the close of escrow up to the next tax bill coming out.