Don't forget the closing costs

Buying a home is exciting but also nerve-racking, especially for first time buyers. If you are buying a home in Pleasanton CA, you are probably thinking about the initial down payment and the monthly mortgage payment you have to make. But there is one thing that many first time home buyers neglect to prepare for, and that is the closing costs.

The closing costs are the fees and charges you pay for your mortgage loan. It is generally between 2-5% of the purchase price. In Pleasanton CA, the closing cost of homes for sale can set you back, on the average, at least $3,700.

Before you can truly own a home, you have to figure out your closing costs. Ideally, your mortgage officer will give you a Loan Estimate which should help you know how know approximately  how much will your closing cost will be. There are also several online calculators which can give you an idea of the closing costs for your home.

What are the usual fees included in a closing cost?

You can basically categorize closing costs into two types - the recurring and the non-recurring costs. The recurring costs are, as the name suggests, expenses you'll have to make a regular payment. The non-recurring costs are one-time payments you only Shave to make to get the loan.

Under prepaid costs, you have to pay the following :

• INSURANCES - You have to secure some insurance when you buy a home. It includes the private mortgage insurance, fire insurance and  flood insurance.

• REAL ESTATE TAXES - This is the tax you will have to pay the government, and it is usually prorated between you and the seller, depending on when the closing takes place.

For recurring costs, the following items are included :

• APPRAISAL FEE. Before your mortgage loan is approved, the home or property you are buying needs to be appraised by a professional lender who will assess the value of the home. In most cases, the lender will require an appraisal from someone of their own choosing. They will not use the appraisal some seller’s sometimes provide. The result of the appraisal will help the lender decide how much money they can loan you. The appraisal fee is usually paid out of closing costs.

• TERMITE INSPECTION FEE - Termite treatment and damage repair is expensive, so most lenders require a termite inspection because they are protecting their investment, the money that they are loaning you to buy the house.

• SURVEY FEE - Like the appraisal and termite inspections, the lender may also require a survey for the property. Usually, this is part of the borrower's fees, but you can negotiate it be paid by the seller.

• HOME INSPECTION FEE - You'll be asked to get a home inspection to verify the condition of the property and see if there are repairs that are needed.

• FLOOD ZONE CERTIFICATION FEE - This is in payment for verifying that the property is located in a flood free zone.

• ATTORNEY - Attorney fees differ from state to state and depend on the attorney that is chosen. Some charge per hour, others charge on a flat rate.

• ORIGINATION FEE- This is charged by the lender to cover the administrative costs of making a loan.

• APPLICATION FEE - Also referred to as the lender's processing fee.

• UNDERWRITING FEE - Whichever lender you choose will have an underwriting fee. It covers the research of the mortgage company checking to see if you are approved for the loan or not.

• CREDIT REPORT - The lender will be checking your credit history to see if you will be approved for a loan, and for how much.

• DISCOUNT POINTS - These are paid to the lender for a lower interest rate. This fee buys you a reduced rate so you have a lower monthly mortgage payment.

• TITLE SEARCH - In buying a home, the lender must search for public records of the property you are buying to see if there are unsettled mortgage payments on the property.

• TITLE INSURANCE - This is paid to the lender to insure ownership of the property.

• RECORDING FEES - This is among the government fees you have to pay for recording the real estate purchase.

• TRANSFER TAXES  - Is another government fee for transferring the property to you.

All these costs can be overwhelming, but that is the price you have to pay to be a homeowner. To make things easier to understand, setup an appointment with your mortgage officer and discuss all these costs and see which ones you can ask the seller to help with. help payment from the seller.

For more home buying or selling information, visit http://www.HomeValuesPleasanton.com/.

Planning to buy a home in Pleasanton? Call me, Rhonda Fee, at 925-200-0827. Allow my extensive experience as a REALTOR® help you find the home of your dreams.