The California Mortgage Settlement Cost Guide
The mortgage closing or settlement costs in California probably causes more questions from the borrower than any other California mortgage related issues. Below is answer to those most common questions regarding the California mortgage settlement cost process.
CALL US TODAY FOR ASSISTANCE 888-892-9805
A California mortgage settlement may involve several different parties, and a large amount of documents and fees. Once you understand what is involved, you may Find the entire closing process a lot simpler than you might have imagined it to be at first. This section will focus on settlements in home purchases in California while much of the information also will be useful if you are refinancing a mortgage in California as well.
Two key factors:
- Buyers think of settlement as the last step to becoming the legal owners of their new home. This actually is a process that begins several weeks or even months before hand and follows an outline that is set by a buyer’s original offer to the seller of the house. That offer becomes the sales contract, once it’s signed by the seller, and it covers many of the key elements of the settlement or closing.
- Fee payments are different from one to the next regarding who pays what closing costs. Buyers and sellers are free to negotiate certain fees. Certain costs can be shifted however keep in mind it may affect the sale price of the property. In most of the United States costs can also be cut by shopping around with different providers of the settlement services you are looking for.
The more knowledge you have about the process, the better your chances are for saving money at settlement time.
Types of Closing Costs:
There are three basic categories of charges and fees in settlement or closing transactions:
- Charges for establishing and transferring ownership These include title search, title insurance, related legal fees, notary charges, hazard insurance, and fees for conducting the settlement.
- Costs of obtaining a mortgage Appraisals, credit checks, loan documentation fees, loan origination, commitment, and processing fees.
Title Insurance:
Your lender will require a title insurance policy. The policy guards the lender against an error by whomever searched the title. (In some cases, the title insurer might arrange for or conduct the title search.) Let’s say, for example, that a long-lost relative of the seller turns up with indisputable evidence that the relative – and not the seller – holds legal title to the property. Though it should have been found in the public records, the relative’s claim was missed somehow. Errors are rare, but they do occur.
The lending institution finds that it has loaned the home buyer thousands of dollars to buy a house from someone who did not own it. To avoid such problems, the lender will insist on title insurance prior to settlement. The cost of the policy (a one-time premium) is usually based on the loan amount, and is often paid by the purchaser. There’s nothing, however, to keep you from asking the seller, during your negotiations, to pay part of all of the premium.
The title insurance required by the lender protects only the lender. To protect yourself against unforeseen title problems, you may also want to take out an owner’s title insurance policy. Normally the additional premium cost is only a fraction of the lender’s policy, but this can vary from area to area.
Shop around, not just for the premium (which can vary depending on how much competition there is in a market area), but for coverage as well. Generally, you should look for a policy with as few exclusions from coverage as possible. The exclusions are listed in each policy. Some policies have so many exclusions – that is, situations under which the insurer will not pay for your title problems- that you end up with little coverage for your premium dollar.
California Mortgage-Related Closing Costs
- Application fee Imposed by some lenders, this charge covers the initial costs of processing your loan request. WE DO NOT impose up front charges.
- Appraisal fee This fee pays for an independent appraisal of the home you want to purchase. The lender requires this opinion or estimate of the market value of the house for the loan.
- Survey At a minimum, the lender will require an independent verification from a surveying firm that your lot has not been encroached upon by any structures since the last survey conducted on the property. Alternatively, the lender may insist upon a complete (and more costly) survey to ensure that the house and other structures legally are where you and the seller say they are.
Loan Origination Fees and Discount Points
One point equals one percent of the loan amount. One point on a $250,000 loan would be $2,500. The points can be financed by adding them to the loan amount at the end to assist you.
This should have helped shine some light on the California mortgage settlement cost process and now you should be able to know how to save money during your mortgage settlement process.
IF YOU NEED ASSISTANCE WITH ANY OF THIS PROCESS CALL US TODAY
888-892-9805
