In most parts of California, homebuyers must deal with the shock of high home prices, which require big mortgages for people making the minimum down payment. However, once they get past the price, they have to contend with closing costs that can often add to their shock. To finalize the deal, homebuyers must cover many costs and fees, including lender fees, attorney fees, recording fees, agent commissions, real estate taxes, mortgage insurance, survey costs and an appraisal. Closing costs vary among states, but they also vary among lenders and markets, depending on the home price. In comparing closing costs, it helps to know what closing costs to expect and how much they cost. A good way to start is by learning what the average California homebuyer pays in order to cover those costs.

Average Closing Costs in California

In California, the average origination fee charged by lenders is $937. The average fees charged by third parties involved in the transaction are $896, which brings the total average closing costs to $1,833. This is just below the national average of $1,847. Hawaii, Connecticut and New Jersey have the highest closing costs, totaling more than $2,000 each. Idaho, Ohio, Utah and Wyoming are among the lowest, with less than $1,700 in closing costs.

On average, borrowers pay the lender $80 for document preparation, $975 for an origination fee and $74 for tax services. Third-party charges include $434 for an appraisal, $619 for closing or settlement, $21 for credit reports, $10 for flood certification, $125 for pest inspections, $100 for postage or couriers and $850 for a survey. These average costs do not necessarily add up to the total averages because some lenders may not charge for some of the costs.

Borrowers are provided with a good faith estimate by the lender, which lists all of the costs and the fees charged. Lender origination fees should be fixed, while third-party fees may vary by as much as 10%. Within three business days before the closing of the loan, the lender should provide a closing disclosure statement outlining all the fees. This should be compared with a good faith estimate to see if there are any variances. If there are variances, then request an explanation for each variance.

What Goes Into California's Closing Costs

In California, closing costs can vary based on the lender, where the home is located and the type of property. The following closing costs are typical for most mortgage loans in California.

Credit Reports: Lenders do a hard pull on a homebuyer's credit report to review credit history and analysis of credit ratios.

Loan Origination Fee: This is the fee lender's charge to cover the cost of processing the loan paperwork.

Inspections: Although inspections are not required for conventional loans, a lender may request a pest inspection if there is any indication of a possible problem in the appraisal.

Survey Fee: In most cases, a surveyor is hired by the lender to verify property lines.

Appraisal Fee: Lenders require an appraisal to verify the property value.

Postage or Couriers: This generally covers the cost of shipping documents between the borrower, the lender and the title company. This is one fee that can usually be negotiated down.

Attorney Fee: Although California does not require an attorney be used in the closing process, borrowers are advised to hire an attorney in order to ensure that their interests are protected.

Seller’s Closing Costs

Sellers are responsible for their own set of closing costs, which can amount to about 1% of the sale price. Sellers’ costs vary widely because some may not be required and others, such as sales commissions, can be negotiated. Costs can include fees paid to bring the property within code compliance, home inspections, a home warranty, sales commissions, property taxes, title insurance and escrow fees.

Colorado (CO): Average Closing Costs

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