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Most Common Closing Cost’s In California

You have finally found the perfect home and are so excited to move in. But now you’re the final process and learning about all the closing costs. What are they, and how do they work?

Closing costs can seem confusing at first, but our easy guide explains the most common fees within California you need to know and make your process go as seamless as possible.

Relevant Closing Costs Terms:

  • Appraisal fee: This payment ensures that a professional can accurately assess the value of the property you are looking to purchase. You may have taken this step at the beginning of your loan application process.
  • Credit report fee: This fee is part of the process and provides lenders with a credit report, which may already have been done at the beginning of your loan application.
  • Underwriting fee: In short, the underwriting fee is a closing cost paid by the buyer directly to the lender. Covering the cost of originating, processing, underwriting and closing your mortgage.
  • Loan discount fee (points): Choosing this option requires an upfront fee helping buyers buy down (lower) their interest rate for the longevity of their loan.
  • Title insurance: This payment can cover anything from, title search, title examination, title insurance, owner’s title insurance & more. 
  • Escrow fee: These fees are paid directly to an escrow company, real estate attorney or title company to conduct the closing and distribute funds to the third parties involved in the real estate transaction. Escrow fees can cover paperwork, distribution of funds and other fees related to the real estate transaction.
  • Prepaid interest: The payment covers interest charges due at closing and any daily interest that accrues on your loan between the date you close on your mortgage loan. Typically, if you close in the beginning of the month your prepaid interest fee is usually higher toward the end of the month. 
  • Recording Fees: In the state of California and depending on the county, this fee can be paid by the seller or buyer to prep all paperwork necessary for the change of ownership. 
  • Transfer Fee: This is a fee in which name of ownership is being transferred to the new owner by the county or state.
  • Pre-paid property taxes: In California, the seller has to pay for the taxes they owe while owning the house. On closing day, lenders will have you prepay for the property taxes to establish your escrow account. (If impounding property taxes)
  • Home warranty: This fee is usually for the seller, covering the heartbeat of your home’s appliances that support your daily routine in case it is to malfunction. We will still provide you a home warranty ourselves if we are unable to negotiate one for you. 
  • Notary fee: This fee is to finalize and apply all notary’s (seals) on documents within the closing process. 
  • Tax Service Fee: A tax service fee is a financial obligation that lenders require of mortgagors to ensure their property taxes are paid in full and on time, making this closing cost an essential part of the mortgage process.
  • Flood Certification: In the state of california, this fee is required to determine if your home is in a potential flooding zone. If so, you will be enforced to apply for flooding insurance on your home.

Ensure that you talk to a GDHomes real estate expert before buying your new home and find out what costs you can expect in your area. In some cases, sellers have even been known to cover all associated settlement charges upon closing.

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