This week, we’ll explore the different costs you’ll encounter when you sign final documentation to secure your loan and purchase your new home. These closing costs are as widely varied in cost and item as the types of mortgages available to homeowners today. For a more detailed look at what you can expect to pay for your unique financial situation and home loan, you’ll need to speak with one of our certified mortgage professionals at BostonMoneyMan in San Diego, CA.
Closing Costs: Non-Property Expenses
Closing costs, in short, are all the expenses that you or the seller of a home will pay when the sale of a home is officially completed, and the property title is transferred to you as a buyer. They are sometimes known as mortgage settlement costs. These include pretty much all the costs other than your actual mortgage payments and down payment costs. It’s important to reiterate that, in some cases, you as a buyer may not have to pay for the entirety of these costs. Your real estate agent and mortgage broker can negotiate with a buyer, in accordance with regulations, to have the buyer pay for part of these fees. You may also be able to include these fees in your actual loan, so it becomes a part of your overall payments, and you owe less at closing.
Closing Cost Basics
Let’s define a few of these costs that you may have heard of, and some you likely haven’t:
- Application Fee: some lenders charge an application fee to cover the cost of processing your application to take out a loan.
- Origination Fees: An origination fee is charged by whatever lender you choose to create the loan.
- Discount Points: Also known as mortgage points, these fees are paid at closing to your lender to “buy down” your interest rate. Each point equals 1% of your mortgage value.
- Survey and Appraisals: The cost of home inspections and determining the value of a home are considered part of closing costs.
- Title Searches and Insurance: Title search proves that the seller owns the home which you are purchasing, and insurance protects you against defects in title to real property. Each come with a fee that you settle at closing.
- Taxes: As with pretty much every other purchase you’ll make, closing on a home means you’ll owe city, county, and state taxes for the transfer of the home and for property tax.
We Can Help You Get a Grasp on Closing Costs
If this is the first time you’ve begun to look at a breakdown of closing costs, you may feel overwhelmed. In addition to the cost of your actual mortgage payment and down payment, closing fees are a lot to take in. It’s important to work with a mortgage professional who can help you get a grasp on how much these fees mean for your finances and the home you want to buy. In addition to underwriting some closing costs to be paid by the seller, there are also local and state programs that can help mitigate these costs or piggyback them on to your actual mortgage. If you live in San Diego or nearby California, we’d love to speak with you. Contact BostonMoneyMan for one-on-one attention and guidance as you begin this great journey to home ownership.