Top 20 Closing Costs You Need to Know
How Much Money Do You Need to Buy a Home? Understanding the Top 20 Closing Costs for Home Buyers Purchasing a home involves more than just the down payment. It's important to be prepared for various closing costs, which can add up quickly. Here's what you need to know about the main expenses associated with closing on a home. GoWpNow and The Warburton Team Explore Ocean View Homes in SoCal Essential Categories of Closing Costs 1. Down Payment: This could range from 3% to 20% of the home’s price, but programs like FHA loans might require as little as 3.5%. VA loans could even offer zero down options. Look into down payment assistance and grants that might cover this for you. 2. Earnest Money Deposit (EMD): Demonstrates your commitment, usually 1% to 3% of the home’s price, though this can be as low as $100 with certain programs like VA loans. 3. Commissions: These are paid to real estate agents. The seller usually covers the listing agent's commission, while the buyer pays the buyer’s agent’s fee, sometimes through seller concessions. 4. Loan-Related Fees: From loan origination to administrative costs, these will be detailed in your loan estimate. Always compare fees and rates among different lenders. 5. Transaction-Related Costs: These vary by state and involve escrow and other legal processes for the transaction. View Single Story Homes in SoCal Comprehensive List of Top 20 Closing Costs 1. Down Payment: Typically, 3% or more of the purchase price. 2. Deposit: Also known as earnest money, often 1-3% of the purchase price. 3. Commissions: Paid to both the buyer’s and seller’s real estate agents. Commissions are negotiable. 4. Loan Origination Fees: Charged by the lender for processing your loan. 5. Appraisal Fees: To determine the property's value for the lender. 6. Credit Report Fees: For obtaining your credit history. 7. Title Insurance: Protects against title disputes. 8. Escrow Fees: Paid to the escrow company managing the transaction. 9. Recording Fees: For documenting the change of ownership with local authorities. 10. Survey Fees: To verify property boundaries. 11. Attorney Fees: If legal help is required during the transaction. 12. Home Inspection Fees: Essential for checking the property’s condition. 13. Pest Inspection Fees: Important in regions prone to termite issues. 14. Homeowners' Insurance: Usually the first year’s premium is paid upfront. 15. Property Taxes: Often prorated and paid at closing. 16. Prepaid Interest: Due from the date of closing to the first mortgage payment. 17. Private Mortgage Insurance (PMI): Required if your down payment is below 20%. 18. Transfer Taxes: Levied for transferring the property title. 19. Homeowners Association Fees (HOA): If applicable, might be required upfront. 20. Appraisal Shortfall: In a competitive market, you might need to cover the difference if the appraisal is below the selling price. Why Professional Experience Matters Navigating a real estate purchase requires experienced professionals, as the process can be complex and nuanced. Remember most real estate agents close less than 10 transactions a year, many less than five. Real estate buying and selling has many twists and turns so why choose a dentist who you like to play golf with but has only done 5 fillings a year! Choose experienced, multi transaction professionals who will support you in your real estate journey. Select a team that handles a large volume of transactions and can effectively guide you through these steps. Legal Disclaimer This blog does not constitute legal, financial, or professional advice and should not be treated as such. Always consult with a professional who is familiar with your particular factual situation for advice concerning specific real estate, legal, financial, or other matters before making any decision GoWpNow and The Warburton Team help hundreds of buyers get home every year. We look forward to representing your best interests as a buyer, and we appreciate the opportunity to be of service. Live Customer First Help from GoWpNow: GoWpNow and The Warburton Team have a dedicated group of licensed concierges standing by to answer questions and help you in your search Talk to your personal Customer First Concierge or text them questions and comments. We are ready to connect with you now. Thank you for considering GoWpNow and The Warburton Team as your partner in this exciting journey. We look forward to assisting you in finding the property that suits your needs. Search All Listings in SoCal
Endless Documents to Sign! Help I need a Buyer's Agent!
In California, the process of buying or selling real estate through a real estate agent involves a significant number of documents to ensure that the transaction complies with legal requirements and protects all parties involved. The exact number of documents can vary based on the specifics of the transaction, such as whether it's a residential or commercial property, the financing details, and if there are any unique circumstances or agreements. However, here is a general list of documents commonly involved in a typical residential real estate sale through an agent. It is highly recommended to consult an attorney and carefully select a real estate agent who is experienced and only represents your side of the transaction NOT both sides. GoWpNow and The Warburton Team Listing Agreement: This is an agreement between the seller and the listing broker, detailing the terms of how the broker will sell the property. Buyer Broker Agreement: An agreement between the prospective buyer and the buyer's agent, outlining the agent's duties to the buyer, the relationship between the agent and the buyer, and the compensation structure. Explore Ocean View Homes in SoCal Real Estate Transfer Disclosure Statement (TDS): A mandatory disclosure by the seller about the condition and any known problems with the property. Natural Hazard Disclosure Statement: A disclosure document that indicates if the property is within one of six predetermined natural hazard zones (e.g., flood, wildfire, earthquake fault zones). Preliminary Title Report: Provided by a title company, this report outlines the property's ownership history, existing liens, and any other encumbrances on the title. Purchase Agreement: This crucial document outlines the terms of the sale, including the purchase price, financing terms, and contingencies such as inspections and appraisal. Loan Application: If the buyer is financing the purchase, this document is submitted to a lender to apply for a mortgage. Loan Estimate and Closing Disclosure: Documents from the lender that provide details about the mortgage terms, interest rates, monthly payments, and closing costs. View Single Story Homes in SoCal Home Inspection Report: Generated by a professional inspector, this report details the condition of the home and any potential repairs needed. Pest Inspection Report: A report that outlines the presence of any wood-destroying pests or organisms. Appraisal Report: A report from a licensed appraiser giving an opinion on the value of the property, typically required by the lender. Contingency Removals: Documents that the buyer submits to remove contingencies as they are satisfied (e.g., inspection, loan, appraisal). Closing Statement: A detailed accounting of all the financial transactions and fees involved in the real estate transaction, prepared by the escrow company. Grant Deed: The legal document that transfers ownership of the property from the seller to the buyer. Home Warranty Policy: Optional coverage that protects the buyer from certain defects and malfunctions in the property after the sale. Insurance Policies: Proof of homeowner's insurance, and possibly flood or earthquake insurance, depending on the property location and lender requirements. Remember, this list is a general guide and the actual documents required can vary. Additional documents might be needed for specific situations, such as HOA (Homeowners Association) documents for properties within an HOA, or adjustments for unique properties (like commercial real estate or vacant land). Always consult with a professional real estate agent or attorney to ensure all necessary documents are prepared and filed correctly for your specific transaction. GoWpNow and The Warburton Team help hundreds of buyers get home every year. We look forward to representing your best interests as a buyer, and we appreciate the opportunity to be of service. Live Customer First Help from GoWpNow: GoWpNow and The Warburton Team have a dedicated group of licensed concierges standing by to answer questions and help you in your search Talk to your personal Customer First Concierge or text them questions and comments. We are ready to connect with you now. Thank you for considering GoWpNow and The Warburton Team as your partner in this exciting journey. We look forward to assisting you in finding the property that suits your needs. Search All Listings in SoCal
Who is on YOUR side when you buy a home?
Did you know that every listing agent (that's the name on the sign outside the home) has a "fiduciary duty" to the SELLER and NOT to the buyer? So, why would a buyer call the name on the sign? That's similar to going to court as a defendant but you are only represented by the plaintiff’s attorney! Who would do that? Will the other side argue for your case? Can you imagine a soccer game where the referee was only paid by one side? How many times have you bought a car and felt like the salesman and the sales manager were just trying to get the best price for the dealership not for you? Can you imagine the stock market if you gave all your hard-earned money to the seller of the stock rather than to a broker who watched the market and tried to get the best price for you? Who is on YOUR side when you buy a home? GoWpNow and The Warburton Team Let’s return to the idea of fiduciary duty. Here is what “fiduciary duty” means: In California, the agent who represents the seller has 6 fiduciary responsibilities to the SELLER - “obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care”. The Listing agent (the name on the sign) has to disclose any conflict of interest (like trying to get the best price for the seller while representing the buyer at the same time), and the listing agent is responsible to negotiate in good faith. Listing agents only get paid if their SELLER is happy with the deal they bring to the SELLER. That doesn’t sound like the best deal for the buyer - does it? View Spanish Style Homes in SoCal Buyer’s agents have represented buyers for many years and their commission is fully disclosed to both buyer and seller. The commission has traditionally been paid by the seller. The seller absolutely has the right to pay that commission on behalf of the buyer although in the future that responsibility cannot be forced on the seller by the real estate community. It is possible in coming years that some or all of the buyer’s agent commission will be paid by the buyer which could dramatically affect the affordability of homes for many first-time buyers. Home buyers need all the help they can get. Here are some important considerations for the home buyer: 1: Are the Seller disclosures about the property complete? These disclosures cover everything from changes made to the home, substances used in the home, the condition of every aspect of the home, the pets that have been in the home, whether someone has passed in the home, the position of the home related to future development or military installations, structural repairs made or needed, and a multitude of other factors. The Buyer’s agent is responsible to represent the buyer and make sure that the buyer makes a purchase with eyes wide open. 2: Does the buyer have the opportunity to look at any and all properties or will they be restricted to view only the property offered by the Seller’s Agent? Every buyer has a right to look at every property - the Seller’s Agent is paid by the seller to sell THAT home - buyers need a buyer's agent to help them buy ANY home that they would like to offer on. 3: Is the buyer obligated to use the lender recommended by the Seller’s Agent who represents the Seller’s interests? Surely the buyer should have the right to choose their lender. Surely the home buyer should be HELPED to contact multiple lenders so that they are aware of all the options that are best for them not just for the seller. After all, the buyer will make the payment, not the seller. 4: Should the buyer be forced to pay the Agent representing the Seller? Well that's a resounding “NO”. If the buyer cannot afford to pay a Buyer’s Agent then potentially they could be forced to be represented by the Agent representing Seller. This is not the case now and should never be in the future. The buyer must never be underserved for the benefit of the seller or the Seller’s Representative. We believe in equal opportunity for ALL. We recommend that every buyer has a frank and honest discussion with their agent as to who pays which agent and what that agent will do for THEM AS THE BUYER. View New Homes in SoCal Ask your agent what they will do for you - here are some suggestions. 1: How available is the Buyer’s Agent? 2: Do you charge me fees up front or just when I buy a home and close escrow? 3: Who will pay the Buyer’s Agent commission? 4: What days do you work, what hours do you work, are you part-time or full-time? (Make sure the work ethic of the agent matches your needs as a buyer). 5: Do you work for buyers or sellers or both? 6: How many buyers have you or your team represented in the last 6 months? 7: Do you have a relationship with the seller of the home I want to buy? Are you working for them or me? 8: How many homes will you show me? 9: How often will you show me homes? 10: What lenders do you work with and why? Who should I call to discuss financing options? Are those lenders recommended by you or the seller? 11: What duties will you fulfill for me during the buying process - like setting up Inspections, explaining paperwork, resolving disputes with the seller, and protecting my interests. GoWpNow and The Warburton Team help hundreds of buyers get home every year. We look forward to representing your best interests as a buyer, and we appreciate the opportunity to be of service. Live Customer First Help from GoWpNow: GoWpNow and The Warburton Team have a dedicated group of licensed concierges standing by to answer questions and help you in your search Talk to your personal Customer First Concierge or text them questions and comments. We are ready to connect with you now. Thank you for considering GoWpNow and The Warburton Team as your partner in this exciting journey. We look forward to assisting you in finding the property that suits your needs. Search All Listings in SoCal
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