Written by attorney Gregory James Glaser

FSBO General List of Closing Costs and Fees

Closing costs tend to be around 2-3% of the home purchase price. Here's a breakdown of the most common closing costs and fees with a rough estimate of average cost: * Appraisal ($150 to $450)- This is paid to the appraisal company to confirm the fair market value of the home. Cost depends on the price of the home. * Credit Report (up to $30) - A tri-merge credit report is pulled by the Lender to get Buyer's credit history and score. Buyer cannot supply a consumer-pulled report. * Closing Fee or Escrow Fee (generally calculated a $2.00 per thousand of purchase price plus $250) - This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. * Home Warranty - In California, most existing homes are sold with a home warranty, which guarantees to the buyer that all of the mechanical and electrical appliances are working on the day of closing and are guaranteed to work for the first year of ownership. The cost for a home warranty starts around $400 and can increase as additional option items are added. * Title Company Title Search or Exam Fee (varies greatly) - This fee is paid to the title company for doing a thorough search of the property's records. The title company researches the deed history on the home, to examine the existence of any claims (i.e., mortgages, easements) on the property. * Survey Fee (up to $400)- This fee goes to a survey company to verify all property lines and things like shared fences on the property. This is not required in CA, unless the lender or buyer requires it. * Home inspection - usually costs around $225 - $450 to verify the condition of a property and to check for home repairs that may be needed before closing. * Flood Determination or Life of Loan Coverage (up to $20) - This is paid to a third party to determine if the property is located in a flood zone. If the property is found to be located within a flood zone, the buyer may need to buy flood insurance. The insurance, of course, is paid separately. * Courier Fee (up to $30) - This covers the cost of transporting documents to complete the loan transaction as quickly as possible. * Lender's Policy Title Insurance(Calculated from the purchase price off a rate table. Varies by company- ballpark $800 for $750,000 home) - This is insurance to assure the lender of the ownership of the home, to maintain a valid lien. Similar to the title search, but sometimes a separate line item. Here is a site to compare price quotes: * Owner's Policy Title Insurance (Calculated from the purchase price off a rate table. Varies by company- ballpark $1,900 for $750,000 home) - This is an insurance policy protecting the buyer in the event someone challenges his ownership of the home. * Natural Hazards Disclosure Report - Required by law in the state of California for the seller to give the buyer. Reports run between $90 to $150. * Escrow Deposit for Property Taxes&Mortgage; Insurance (varies widely)- Often the buyer is asked to put down two months of property tax and mortgage insurance payments at closing. These prepaid items usually include insurance premiums (for Homeowners Insurance -- also called Hazard, or Fire Insurance -- and Private Mortgage Insurance) and estimated Real Estate Taxes. Notably, HUD regulations limit the amount of money a lender may require the borrower to hold in an escrow account. * Transfer Taxes (varies widely by state&municipality)- This is the tax paid when the title passes from seller to buyer. In general, property transfer taxes can range from nothing to $10 per $1,000 of the sales price or more, or there may be assessed a flat fee. * Recording Fees (varies widely depending on municipality) - A fee (around $20) charged by the county recording office, for the recording of public land records. * Processing Fee (up to $1,000) - This goes to the buyer's lender. It reimburses the cost to process the information on the loan application. * Underwriting Fee (up to $795) - This also goes to the buyer's lender, covering the cost of researching whether or not to approve the buyer for the loan. * Loan Discount Points (often zero to two percent of loan amount)- "Points" are prepaid interest. One point is one percent of the loan amount. This is a lump sum payment that lowers the monthly payment for the life of the loan. Points are equal to a percent of the loan amount. 1.75 points is equal to 1.75% of the loan amount. Discount points represent additional money the buyer can pay to the lender at closing. If the buyer pays more points it will lower the interest rate. Usually, for each point the buyer pays for a 30-year loan, the interest rate is reduced by about 1/8th (or .125) of a percentage point. Paying points can be helpful if the buyer plans on living in the home for a long time. * Pre-Paid Interest (varies depending on loan amount, interest rate and time of month you close on your loan)- This is money the buyer pays at closing in order to get the interest paid up through the first of the month. * Property Tax (usually 6 months of county property tax). The buyer's property taxes will be approximately 1% of the purchase price, plus any voter approved bonded indebtedness of the community. (A common one in Contra Costa County is the "Mello Roos" assessment which is added to the property taxes for every home located within the Mt. Diablo School District. This is an additional $67 per year which is added to the tax bill. Another common item is for "pest abatement" and may be about $4 per year. Or a bond for a sewer district which can be $200 per year.) * Wood Destroying Pest Inspection and Allocation of Costs - If required by the lender or buyer, the inspection generally runs up to $125. Repairs can get expensive if evidence of termites, dry rot or other wood damage is found. Example: Fumigation of a typical 1500 square foot house could run around $2,000. * Home Owners Association Transfer Fees- The Seller will pay for this transfer which will show that the dues are paid current, what the dues are, a copy of the association financial statements, minutes and notices. The buyer should review these documents to determine if the Association has enough reserves in place to avert future special assessments, check to see if there are special assessments, legal action, or any other items that might be of concern. Also included will be Association by-laws, rules and regulations and CC&Rs. The fee for the transfer varies per association, but generally around $200-$300.

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