Below is a list of typically what a buyer is responsible for. Depending upon the market, or the type of loan, it may be possible to negotiate and have the seller pay all, or some, of these costs.
CLTA Owner’s Title—California Land Title Association. A policy of title insurance usually insuring an owner of real estate against loss by defects, or liens against, or the unmarketability of the owner’s title. These fees are negotiable between buyer and seller.
ALTA Lender’s Title—American Land Title Association. This covers many additional risks such as unrecorded mechanic's liens, assessments, encumbrances, encroachments, easements, water rights, mining claims, patent reservations, conflicts of boundary lines, and shortages in area access to and from the land and other visible matter. In California, the buyer is responsible by law to have this coverage, but the seller may pay it for the buyer.
Escrow + Loan Tie In—Fees charged by an escrow company to carry out the instructions of the purchase contract. The escrow company will coordinate with buyer’s and seller’s realtors, lenders, and vendors. They will disburse documents and funds. Escrow closes when the transfer of the deed is properly recorded upon fulfillment of all the conditions specified in the purchase contract.
Recording Fees—Fees for preparing and filing documents with the Kern County Recorder’s office. Recording is a matter of public record, giving notice to future purchasers, creditors, or other interested parties, and requires the witnessing and notarization of a third party.
Impounds for Taxes and Proration—A portion of a borrower's monthly payment is held by the lender or servicer to pay for taxes, mortgage insurance, lease payments, and other items as they become due. Also, known as reserves.
Impounds for Fire Insurance—A portion of a borrower's monthly payment is held by the lender or servicer to pay for hazard insurance.
Flood Insurance—An insurance policy for the protection of the home when property is located in flood zone A.
Inspections—Termite, roof, fireplace, air conditioning, electric, plumbing, spa, pool, septic, well, whole house inspection, etc. These are totally negotiable, and are paid by seller or buyer, or both, depending on the terms of the purchase contract. Inspections may be certified for a period of time, or may only be valid the date of the inspection. They are usually performed during the escrow period of the sale.
Prepaid Interest—Mortgage interest is calculated for a one-month period and prepaid at the close of escrow.
Loan Origination Fee–Covers the lender’s administrative costs for processing the loan. It is often calculated as a percentage of the loan, usually 1%, although the fee will vary among lenders.
Loan Assumption Fee–Charged by lender when a buyer “assumes” or takes over the duty to pay the seller’s existing mortgage loan.
Credit Report—Covers the cost of the credit report, which shows the buyer’s credit history. Lender usually uses the information in the credit report to decide how much money to lend, and ultimately whether or the prospective borrower is qualified to receive a loan.
Discount Points—Alsocalled “loan discount” or “points.” It is a one-time charge imposed by the lender to lower the rate at whichthe lender would otherwise offer the loan. Each point is equal to 1% of the mortgage amount.
Appraisal Fee—Fee for a home appraisal report performed by a state certified appraiser.
Home Warranty—A warranty issued by a service company that guarantees the main systems of the home for a period of one year. Typically, this is paid for by the seller, but in some instances a buyer may want to include it at his or her own expense.
Miscellaneous Fees--Other lender fees that could include a Mortgage Insurance Application, a Lender’s Inspection Fee, or any other fees required by lender.
Typically, buyer’s closing costs will total approximately 4% - 6% of the total home purchase price. Mortgage companies all have varying fees so it is best to request an estimated closing cost statement from your lender along with the pre-approval letter. Escrow companies will also be able to quote fees as well.
Call me at (760) 382-1082 and let’s talk further about what your closing costs will entail. Remember, the fees above do not include a loan down payment that may also be required in order for you to purchase.