November 15th, 2017 at 11:00 am


When are closing costs due?

Closing is when the title of the property is transferred from the seller to the buyer, and is the last step in buying a home. Closing costs are the fees associated with your purchase. They are incurred by either the buyer or seller and can vary in each situation, depending on where you live, the property you buy, and the type of loan you choose.

You could pay as you go along for each step involved, but typically, they’re all due at the close of escrow. In many cases, they’re all rolled into the mortgage, which spreads them out over time but boosts your monthly house payment. Whether you are a first-time buyer or looking to refresh your memory, we’re sharing everything you need to know about closing costs.

How much are closing costs for buyers in California?

Homebuyers typically pay about 2 to 5 percent of their residence’s purchase price in closing costs. That can be a significant amount, so again, work with your agent to determine what is negotiable. Your lender will give you a loan estimate within three business days of receiving your completed loan application and it will include the total sale price as well as what the closing costs on your home will be. But these are just an estimate and many of the fees listed can change. If they do change, you should receive a revised loan estimate.

Even before closing costs are due, the lender will require that you have a homeowner’s insurance policy on the property. Unless you’re paying cash for the house, you cannot buy without backing from a mortgage lender, which comes in the form of a commitment letter.

Your lender is required to outline your closing costs in the loan estimate and a closing disclosure you receive before the final day of closing. Take the time to review them closely and ask questions about anything you don’t understand.

What do closing costs cover? 

With so many types of closing costs possible, we’ve narrowed down a list of the most common examples homebuyers might incur. Your real estate agent will keep you apprised before closing costs are due, so there shouldn’t be any surprises. Just remember that everything is negotiable, with the seller sometimes agreeing to share closing costs or drop the home’s price to help move the real estate transaction along.

Here’s a look at the total closing costs you might face:

Can you avoid paying closing costs?

As mentioned, many of the fees that make up closing costs are negotiable and some are completely unnecessary, especially things such as high administrative, mailing or courier costs charged by your lender. Remember that you can shop around and might be able to find other lenders who are willing to offer you a loan with lower closing fees.

Reviewed by Chris Fryson
Chris Fryson currently serves Berkshire Hathaway HomeServices California Properties as its VP of Human Resources. Prior to this role, he was a successful Branch Manager in several offices throughout San Diego and has won several awards in his service to the real estate market and its professionals.

Still have questions? Reach out to one of our many qualified real estate agents who can guide you through every step of the process. 

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