How Much Should I Expect to Pay On Closing Costs?
Whether you’re first-time homebuyer, or looking to trade up to a larger home, there are many closing costs associated with a real estate transaction. Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these cost will apply in every transaction, however, it’s better to know about them ahead of time so you can budget accordingly.
The last thing you need are non-budgeted financial obligations popping up and catching you by surprise on closing day.
Read through the following checklist to make sure you’re budgeting properly for your next move.
Appraisal Fee
Your lending institution may request an appraisal of the property, which would be your responsibility to pay. Appraisals can vary in price and are typically paid COD. Expect to pay approximately $350-$500 for Single family residence or condo in California and $750-$1,000 for lots over 1 acre.
Property Taxes
Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly mortgage payments, “your lending institution may require annual proof that your taxes have been paid.” In California, property owners are required to their annual tax amount in semi-annual installments. Your first installment is due in November 1st, and will be considered late if not paid by 5:00pm or postmarked on December 10th. The second installment is due in February 1st, and likewise considered late if not paid by 5:00pm or postmarked by April 10th (hint: No Darn Fooling Around).
Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5%-3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.
Home Owners Association Fee
Condos and Planned Unit Developments (PUD) charge monthly fees for common area maintenance. Costs will vary. Consult with your real estate agent before purchasing a condo or PUD.
Local Improvements (Mello Roos/Special Assessments)
If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars. Consult with your real estate agent before purchasing a new development.
Land Transfer Tax
This tax is applied whenever property changes hands and the amount that is applied can vary.
Survey Fee
Your lending institution may ask for an updated property survey. The cost for this survey can vary between $300-$1,000.
Property Insurance
Home insurance covers the replacement value of your home (structure and contents). Your lending institution will require proof of insurance.
Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee.
