Buyer Special Offer

SAVE THOUSANDS OF DOLLARS ON CLOSING COSTS

when you are represented in the purchase of your home by Ellis Posner

Receive a $10,000 credit for closing costs for homes priced above $1,000,000.

Receive a $5,000 credit for homes priced below $1,000,000.

There are certain restrictions so make sure you read the “small print” below.

What Are Closing Costs?

Simply put, the money you need to in addition to your down payment before you can get your keys.

So if you are buying a house for $1,000,000 with 20% down that means in addition to the $200,000 down payment, all the additional funds to cover your expenses related to closing the transaction (transfer of title from the seller to the buyer).

In most instances the costs are between 1-2% of the purchase price but can be higher or lower depending on a lot of factors such as loan origination fees, the type of loan, transfer taxes, escrow company fees, where the property is located, when during the year you close and other items that will be discussed below.

Both buyers and sellers each have closing costs and their expenses will not be the same.

Closing costs are identified as either “recurring” or “non recurring”. A non recurring cost is one associated solely with that escrow such as a recording fee, transfer tax or appraisal. Recurring costs are things like property taxes, homeowner’s insurance or (pre-paid) mortgage interest.

Let’s look at some examples of both.

Non Recurring Closing Costs

Escrow Fee: This is the fee paid to the escrow company (or title company) that oversees the closing as an independent 3rd party.

Lender’s Policy Title Insurance: This is insurance to assure the lender that you own the home and the lender’s mortgage is a valid lien. It protects the lender if there is a problem with the title. Please note - an Owner’s Policy of Title Insurance is an insurance policy that protects you in the event someone challenges your ownership of the home. It is usually paid for by the seller.

Origination Fee: This covers the lender’s administrative costs. Lender’s have different fees.

Recording Fees: A fee charged by the local recording office for the recording of the grant deed transferring title.

Transfer Taxes: This is the tax paid when the title passes from seller to buyer. While it is often entirely paid for by the seller, some cities, like Redondo Beach, split it 50/50 between buyer and seller.

Recurring Closing Costs

Home Owners Association Dues: If you are buying a property subject to a HOA, you will have to pay whatever your pro-rated portion of the dues for the month are at closing.

Homeowners’ Insurance: This covers possible damages to your home. Your first year’s insurance is often paid at closing.

Prepaid Interest: Lenders will require that you prepay interest that will accrue between the closing and the date of your first mortgage payment. “Points” are also considered prepaid interest. This is a lump sum payment that lowers your monthly payment for the life of your loan.

Property Tax: Typically, property taxes due are paid at closing. Often the amount you pay may be lower than your property tax bill going forward because the property has not been re-assessed yet.

These are just some examples, there are others such as notary fees and courier fees which may appear on your closing statement. Some fees associated with closing such as your appraisal are considered “POC”, paid outside of closing, because you may be paying for that directly. And then some types of loans such as VA and FHA have other specific fees associated with those loans (and which sometimes can be rolled into the loan amount). And for those putting down less than 20% the lender may require the creation of an impound account which will escrow a few months of property taxes or other charges.

All of the above is why there is no one size fits all easy formula for what your closing costs will be. What is easy to understand is how much will be paid on your behalf when Ellis Posner is your Broker and you receive a credit for closing costs.