You’ve found the perfect home for sale in Santa Cruz and a mortgage loan with the best interest rate you can find. What’s next in the home buying experience? Closing. It's time to sign the contracts, ensure the contingencies are covered, and pay your portion of the closing costs. But what exactly are closing costs?
Understanding Home Buyer Closing Costs
While working with a real estate agent comes at no cost to you as a buyer, there are still fees you may be required to pay as part of the purchase. If you're planning to buy a home in Santa Cruz, here's a breakdown of the typical closing costs that you can expect to encounter:
These include the title search, title insurance, and the associated attorney fees. These costs are usually paid by the seller but can be assigned to the buyer. When purchasing a home, you'll need to transfer the name on the title and its insurance into your name.
The government charges a fee to record the change in ownership of the Santa Cruz property. This can be paid by either the seller or the buyer.
The survey fees can be required by the lender. It is a fee for the survey of the land or lot, and its structures, to determine that it matches the property description.
Mortgage Application Fee
Are occasionally included in closing costs, but usually are paid prior to closing by the buyer.
Appraisal and Inspection Fees
Are required by the lender to ensure that the value of the property is equal to that of the loan, and to make sure there aren’t any underlying problems that detract from the property value. These fees are usually paid by the buyer.
Equal to one percent of the principal of the loan. These discount points are paid by the buyer to the lender to reduce the final interest rate of the loan.
The seller pays the real estate agent this fee for listing and showing the property, and handling the contract negotiations. The commission is usually a percentage of the sale price of the property, and determined in advance by the seller and the real estate agent.
The buyer pays underwriting fees to the lender to pay for the costs of determining if the buyer qualifies for the mortgage loan.
County taxes are usually required to be paid for six months in advance at the time of closing. The buyer is responsible for these fees.
Learn More About Closing Costs
Want to learn more about what closing costs are and how to avoid them? Check out our other blog post on "Closing Costs Explained: A Resource For First-Time Buyers". Don't let closing costs take you by surprise! Be informed and always choose a real estate agent that you trust to have your best interests in mind. If you have any more questions about what closing costs are and how they work in Santa Cruz, feel free to send me a message or call me at 800-226-4717. I've been helping people buy and sell homes in Santa Cruz for over 29 years, and I'll be happy to share my expertise with you!