If you’re buying Santa Cruz real estate and talking to lenders, you’ll hear about the Good Faith Estimate. Because the Good Faith Estimate is required by law and lists all the costs associated with a mortgage, including closing fees with estimated pricing, it's a good place to start when searching for a lender.
Best practice for buying Santa Cruz real estate is to shop for lenders first. While you’re looking, ask for a Good Faith Estimate and then compare them. This will be your first indication about which lender is best for you.
Not All Estimates are Created Equal
Many closing fees for buying real estate are considered typical and have an average price range, such as:
• Title search and title insurance: $450 - $600
• Appraisal: $150 - $400
Because real estate closing practices vary depending on where you live, your location helps to determine what those closing costs will be. However, you might also find some extra padding on your closing fees, which some in the mortgage and real estate industries call “junk fees."
Most Good Faith Estimates (GFEs) have a breakdown of individual charges, but some may just be a lump sum amount such as: “Total of lender’s fees $1,395.” As long as the fees add up correctly to the estimated amount, there’s no problem. However, watch out for and question general wording like “miscellaneous fees,” “packaging fees” or “marketing fees.”
You have the right to request an explanation for any fee listed on the GFE. Although most GFEs have an explanation after each listing, some may not. If a fee seems odd to you, ask about it.
It's Only an Estimate
One final tip: The GFE is only an estimate, not the exact amount you'll be paying. At least one day before closing, get your final tally of the closing costs from your lender. Compare this to your Good Faith Estimate to make sure no additional fees were added. If you see inconsistencies, talk with your lender immediately to resolve these issues.
Need help finding a lender? I can help. Call me at 831.662.6522 or email me at Lauren@LaurenSpencer.com for more information.