Ed Gillespie, Loan Officer ~ Mortgages for greater Sacramento and California

What It REALLY Costs to Get a Roseville Mortgage

Recently, I have had a few clients be shocked at closing cost quotes I have given them. On each, I went back and checked my numbers very carefully and, yes, the quotes were right! The client just didn’t realize that there were many costs associated with a home purchase!

No one wants any unpleasant surprises that involve money! So, here is some information on closing costs to help you better prepare for a home purchase.

In addition to a down payment, home buyers should anticipate these possible costs:

Home Inspection

An inspector will review the mechanical, electrical, and structural aspects of your home then provide a written report.

Condominium/Home Owners Association-related Fees

These may be required if you purchase a home in a condominium complex.

Well and/or Septic Certifications

If the property has either of these systems, a buyer will want professional testing to ensure they function properly.

Pest Inspection

A qualified professional inspects the property, looking for termites and other pests and pest damage then submits a report.

These costs are common in a purchase transaction:

Credit Report

This fee covers the cost of a three bureau credit report which shows each borrowers’ credit history. The borrowers will be provided a copy of their credit report.

Appraisal

An appraisal is a professional opinion about the value of your home, prepared for the lender. The appraisal is usually paid for up-front by the borrower. And, in a few cases, more than one appraisal may be required. Buyers receive a copy of the appraisal.

Title and Escrow services, such as title search and insurance, so buyer and lender are sure that no one else has any lien, claim, or encumbrance on the property; recording the Deed and mortgage with the County Recorder; Notary for signing services; and, preparing documents necessary to close a real estate transaction.

Lender’s Origination Services

For services involved in the creation of a mortgage loan, such as loan processing and the underwriting of the loan.

Property Taxes

Payable to the County. The amount collected depends upon the month of the year the property sale closes.

Insurance

Lenders typically require the first year of fire and hazard insurance be paid up front. Flood insurance will be required if the house is in a flood hazard area.

Impounds (also call Reserves)

Prepayments of funds, held in an account, to cover annual charges for homeowner’s insurance and property taxes which will be paid by the lender on the borrower’s behalf. Sums will be added to the impound account each month from the monthly mortgage payment.

Prorated Mortgage Interest

Depending upon the time of month a loan closes, this per diem charge may vary from a full month’s interest to a few days interest. Future interest payments will be made through the monthly loan payment.

Supplemental Property Taxes

The buyer will be billed by the County for these, by mail, after the sale closes. Supplemental taxes that are assessed due to a change in ownership.

The amount of closing costs varies, depending upon the amount of the mortgage and type of loan (i. e., VA, FHA, USDA or Conventional). A mortgage professional can provide an estimate of costs when a potential buyer completes the prequalification process.

What if you don’t have enough money for closing costs? Consider a gift from a family member or participating in a down payment assistance program.

Related Posts:

Shopping for a Hazard Insurance Policy

A Lesson about Hazard Insurance in California

Making Sure Your Cash to Close Comes from the Proper Source

Help for California Homeowners with Financial Hardships

If you are a homeowner experiencing financial hardship, the California Housing Finance Authority (CalHFA) might be able to help!

CalHFA has a mortgage assistance program called “Keep Your Home California”, a federally funded initiative for low- and moderate-income homeowners who are delinquent or facing default on their primary residence. The program has four components:

Unemployment Mortgage Assistance*

For homeowners receiving California EDD Unemployment, mortgage payment assistance up to $3,000 per month for up to nine months.

Mortgage Reinstatement Assistance*

One time payment of up to $20,000 for principal, interest, taxes, insurance and HOA dues for those who have fallen behind on their first mortgage.

Principal Reduction*

Funds to be matched, dollar for dollar, by the loan servicer (the company to which the monthly payment is made each month) for loan principal reduction. (For mortgages originated before 1/1/09)

Transition Assistance*

One time funds up to $5,000 for homeowners involved in a short sale or deed in lieu of foreclosure.

CHASE Hosts Ontario Event for Mortgage Customers Needing Assistance, November 17-19

For a non-hardship refinance, please call me at (916) 849-9200.

BofA Hosts Sacramento Event for Mortgage Customers Needing Assistance, November 17-19

For more information, see page 2.

For a non-hardship refinance, please call me at (916) 849-9200.

Greece, the Fed and Inflation—Oh, My! How Do We Get Mortgage Interest Rates?

First, here’s how we don’t:

There are three common misconceptions about how mortgage rates are determined: 1) solely by each lender, 2) by the Federal Reserve and/or 3) based on the 10-Year Treasury Note. There are still mortgage professionals claiming rates are based on the 10-Year Note. Wrong!

Now, here’s how we do:

While there are several generic interest rate trend indicators, rates can be influenced at any given moment by at numerous different variables in the market and with each individual loan approval scenario. The mortgage rate marketplace is dynamic and complex.

Lenders set their rates every day based on the market activities of Mortgage Bonds, also known as Mortgage Backed Securities (MBS). A lender might adjust their pricing up to five times in one day depending on what’s taking place in the market. A printed rate sheet can become obsolete the moment it is printed!

So what are the major influences on Mortgage Backed Securities (MBS)?

1. Inflation
2. Federal Reserve Actions
3. Unemployment Figures
4. Gross Domestic Product (GDP) Figures
5. Geopolitics – Unforeseen events related to global conflict and political events

Why does this matter to you?

With multiple market indicators reporting and changing throughout any given day, timing the market for the best possible opportunity to lock a mortgage rate on a new loan is a big challenge. Top notch professionals have access to real time market data and expert analysis to guide them. Don’t work with a lender that doesn’t! Why? Because your loan’s interest rate determines the amount of lender credit you will receive for your closing costs! Locking an interest rate too early or too late can be an expensive error for which YOU end up paying!

Home shopping or refinancing and want to learn more about interest rates? Watch this video! For more information and a real time look at the mortgage market, please call me at (916) 849-9200!