What Are Title and Closing Costs?

title_deeds

Signing the documents that will finally get you your home is one of the most exciting days of your life. Here’s a handy guide to understanding what happens to obtain title and what your closing costs are all about.

What Exactly Are the Costs of Closing?

Most of the time you will have to pay for things like escrow fees, appraisals, loan fees, advanced payments like property taxes or homeowner’s insurance, real estate commissions, title insurance, real estate transfer taxes, termite inspections and such. Some of these may be negotiated in your purchase contract.

What’s it Gonna Cost Me?

Closing costs vary greatly, but when you get a loan for your new home you will be provided with a good faith estimate of what they’ll be.

Can I write a Check?

Typically, title and escrow companies frown upon personal checks except for your initial earnest money deposit that goes with your offer. Closing funds should be in the form of a cashier’s check or even better a wire transfer directly from your bank to escrow.

Do I HAVE to Buy Title Insurance?

It is not a legal requirement for you to have, but any lender will require it for the face value of the deed of trust. This holds true whether you are making an initial purchase or refinancing. As a one-time premium, it’s worth having because it protects you against loss from things like unknown liens or encumbrances that were in place at the time you took title. It also protects against fraud (false claims of ownership, forged deeds etc), human error and improper wills and deeds.  It can also aid in boundary disputes depending upon the type of title insurance purchased.  We at The Perreault Group STRONGLY recommend that you buy the title insurance — the seller usually pays for the initial policy and the buyer pays to have their lender insured.

Is there a “Closing Table”?

In California, the closing process is actually fairly anti-climactic!  You go to the escrow office a few days before closing to sign final docs including your loan docs.  Then generally a day or two after signing the docs, the loan funds.  Recording usually happens the next day after that which is the official “close of escrow” and you get the keys from your agent (preferably ME!) after recording has been confirmed by the title company to the escrow officer and your agent.

Of course, this is the quick and dirty version; if you have other more specific questions or concerns about closing costs or title insurance in particular, please contact me at 310-418-5353 or add your comment below!

 

How Do I Hold Title in California?

The means of holding Title to real property in California can be done in many ways.  You may think that the method doesn’t matter, or you may think you should just choose what you always have, but this is not necessarily true, as some new choices such as “Community Property with rights of Survivorship” may override the “Joint Tenants” choice that most married people used to take.

The choice of title can have serious implications in the event of the death of one of the persons on title, a divorce, or even a refinance.  Although I am not an attorney and am not allowed to give legal advice, I can pass on this great article in the LA Times.  You may also wish to consult with your tax attorney, CPA, or an attorney who is handling your estate planning to be sure that the choice you make is the best for you.

Read the LA Times article here:  Picking the Best Way to Hold Title to Your Home