What are closing costs and how are they paid?

Closing costs are the expenses incurred when a mortgage is finalized and the homebuyer officially takes possession of a property. These costs are typically paid by the buyer, although they can also be paid by the seller or split between the two parties. In California, closing costs vary depending on the type and size of the mortgage and the region in which the home is being purchased. These costs can include the loan origination fee, title search fee, credit report fee, appraisal fee, survey fee, underwriting fee, recording fee, and other miscellaneous fees. Most closing costs are paid from the buyer’s escrow or closing account, which is set up by the lender and serviced by a third party (such as a title or escrow company). The closing cost is typically paid upfront and is generally non-refundable. This amount, which is typically 2-4% of the total loan amount, may be rolled into the mortgage if the buyer has enough equity in the home to cover it. This will increase the amount of the monthly payments, but it can make purchasing a home more affordable. Overall, closing costs are an important part of the mortgage process and should not be overlooked. By understanding what these costs are and how they are paid, buyers can make informed decisions when it comes to purchasing their new home.

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What are closing costs and how are they paid?

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