Closing costs are a list of charges you will have to pay on the closing date that is set for your Dana Point home. Many people are surprised at the additional costs over and above the price of the home.
Closing costs will vary from area to area, but a good rule of thumb is to plan for at least 1.5% of the purchase price for closing costs in addition to the down payment. It’s not a bad idea to allow 2.5% for closing costs, just to be on the safe side.
Closing Costs Broken Down
Here are some of the closing costs you may encounter depending on your specific situation. Use this as a guideline then talk with your lawyer or closing agent, who can provide a more realistic estimate for your situation.
Land Survey Fee or Title Insurance Fee
A recent survey of the property is usually required by lenders. If one is not available the cost can range between $600 – $900 for a new survey. In lieu of the survey most lenders today will accept title insurance which can cost considerably less.
Appraisal Fee
An appraisal provides the lender with a professional opinion of the market value of your Dana Point home. This cost is normally the responsibility of the homeowner and it can cost between $200 and $500.
Home Inspection
A professional inspection of the home, top to bottom, is for the benefit of the buyer. A home inspection can cost anywhere from $250 – $400 and is well worth the investment. When hiring a home inspector make sure the inspector has liability insurance just in case they overlook something.
Homeowner Insurance
Mortgage lenders require a certificate of insurance to be in place from the time you take possession of the home. The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality.
Mortgage Insurance
If your mortgage is insured, you will be required to pay the applicable taxes on the insurance premium at closing. While the insurance premium can be added to the mortgage amount, the tax must be paid at closing, where applicable.
Land Transfer Tax
Most provinces charge a land transfer tax payable by the purchaser. The amount varies depending on the province. Land transfer tax is based on the purchase price. First time home buyers purchasing a new or re-sale home may be entitled to a refund.
Legal Costs and Disbursements
Lawyers and notaries charge fees for their services involved in preparing the deed, preparing the mortgage, and conducting the various searches. Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies.
Closing Adjustments
An estimate should be made for closing adjustments for bills the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser. A lawyer will let you know what they are once research has been completed. You will be given what is known as a “Good Faith Estimate” of closing costs prior to your closing so you will know exactly how much money you’ll need to bring to closing.
If you have any questions about closing costs on your Dana Point home, just use the comment box below or click over to our website and contact us there.
Faced with plunging property values and rising defaults, lenders are charging borrowers higher mortgage rates and adding fees. Not all of these added costs are set in stone, however. If you’re looking for a loan, vigilant shopping and a little haggling can go a long way toward landing a better deal.
Here are some fees you need to watch out for:
Application Fees
Just because an ad says “no application fee” doesn’t really mean there’s no fee to get the loan. Fees paid outside of closing typically include an application fee, an upfront property appraisal fee, and a credit check. They might be disguised as something like a “document processing fee” or “doc fee.”
Risk Adjust Rates
Getting deemed a risky borrower is no longer just a matter of a low credit score. Lenders now consider other risk factors. Buy in an area that has seen values drop precipitously and you can expect a higher interest rate.
Down Payment Penalties
The days of zero down on a mortgage are long gone. Without a down payment of at least 20%, prospective homebuyers will undoubtedly be hit with a higher interest rate and need to pay for more points. (Each point usually amounts to a fee of about 1% of a mortgage.)
Also, if buyers can’t put 20% down, they’ll need to get private mortgage insurance, which typically costs 0.5% of the loan. Shopping around for lenders with more-favorable points and insurance charges can help lessen the blow.
Closing Costs
Closing fees amount to 2% to 5% of a home’s price. Location plays a big role, as taxes and other requirements vary by state. Some states require expensive attorneys to oversee the closing process, while others allow a title agent or escrow officer.
Ask potential lenders for a good-faith estimate of closing costs. Then check in weekly with whoever is handling the closing to see whether there are any changes in either lender or third-party fees.
If you need a place to start looking for a dependable mortgage expert, contact us. We work with many lenders and can give you a few names and numbers to get you started looking for the best home mortgage.
It is important that a home buyer understand all of the costs involved in purchasing a home. These costs go way beyond the purchase price. Inspections, fees, appraisals, and on and on and on…. the terminology used in real estate can be extremely confusing for home buyers. What’s more, who pays for these things is even harder to figure out.
Real estate agents, title company officers, and mortgage providers deal with real estate transactions on a daily basis, so they understand this language. When it comes to what is known as the ‘closing costs’ it becomes even harder to understand for the average home buyer. Because closing costs can be, and often are, negotiated between buyer and seller, there are no clear-cut answers. Let’s start by taking a look at the closing costs that can appear on your closing statement:
- Upfront, prepaid, interest points
- Appraisal costs
- Title transfer costs
- Real estate agent fees
- Loan origination fees
- Property taxes
- Homeowner’s insurance
These closing costs are simply the extenuating costs of purchasing a home. But, they can’t just appear out of nowhere when it comes time to write the check. That’s where the ‘HUD’ comes in.
All closing costs must be disclosed on a form called the HUD-1 Settlement Statement. The HUD-1 must be signed by all parties in the transaction before it is legally considered complete. In most cases, the loan officer for the buyer and the buyer’s agent will review the HUD-1 with the buyer so there are no surprises when it comes to signing it at the closing table.
Included in the HUD-1 Settlement Statement are also any credits due to the buyer, such as the down payment amount, tax credit from the seller, buyer closing costs the seller has negotiated to pay, as well as any money held in escrow on behalf of the buyer, such as the earnest money deposit.
This is a long, long list of money in and money out. Many of the terms may be confusing to you, the buyer. Don’t be afraid to have your agent explain, in detail, each and every item and provide supporting documentation to help you understand. A good real estate agent and loan officer will provide a true copy of the estimated HUD-1 prior to your closing. You may even want to obtain a blank HUD-1 form to read through just so you are prepared to ask questions before the figures get filled in.
Closing costs are often said by home buyers to be the most confusing part of the entire home buying process; even more confusing than inspections, offers, and contracts. These costs deserve individual attention from both you and your buyer’s agent. Be sure to insist on being fully informed as to the detail of each cost. After all, you are footing the bill for this large investment of a home and you deserve to know everything that involves your money.
Mortgage closing costs are on the rise across the nation and are up 8.8% over the last twelve months. Origination and title fees on a $200,000 home loan average $4,070 nationally according to Bankrate Inc.’s 2011 Closing Costs Survey.
Banks are requiring extra employment verification and the like to keep loans in shape for Fannie Mae and Freddie Mac, and although these regulations “have been in place for a couple of years already, the mortgage industry takes them more seriously now. New forms and regulations that are still in discussion are influencing lenders already.”
Bankrate said, “On average, lenders charge about $1,614 in origination fees this year, up 10.3 percent from last year. Origination fees include lender charges for services, such as underwriting and processing.”
“Interest rates get a lot of attention, and rightfully so, but it’s also important for consumers to compare lender fees when shopping for a loan,” said Greg McBride, CFA, senior financial analyst for Bankrate Inc.
Is lending passing on a cost that should have been built in to start with? What do you think of the rising closing costs? Click the comment link below to sound off.
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