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Additional Charges

When 90% of the purchase price is being financed, some additional fees may be required:

Private Mortgage Insurance (PMI)
Usually the cost is .05% points. The lender will require one (1) year prepaid through escrow plus two (2) months placed in an impound account.

Fire Insurance
The lender will require one (1) year pre-paid through escrow plus two (2) months placed in an impound account.

Real estate property taxes
Depending on the month of closing, the lender will require two (2) to five (5) months placed in an impound account. The lender must have enough reserves in the impound account in order to pay the taxes when they become due. Therefore, the amount of reserves is determined by the closing date, date of first payment and the due date of the property taxes.

Credit cards/personal loans/car loans
Depending on your income to loan ratio, the lender may require that all or a portion of your debts be paid in escrow which information will be supplied to the escrow holder. However, it is your responsibility to submit current billings to escrow for payment as they will not check balances or verify that any recent payments have been made.

Title insurance policy
In most instances, you will be requested to purchase an Owner’s (CLTA/Owners) and/or a Lenders (ALTA/Lenders) Policy of Title Insurance. A lender will not loan you money without title insurance.
* CLTA owner’s policy–Insures that you have clear title to your property and that no individual or governmental entity has any recorded rights, liens, claims or encumbrances against your property. * ALTA lender’s policy–Issued to institutional lenders only. This policy insures the lender’s priority and the fact that title is marketable with no liens except their deed of trust. It covers both recorded and unrecorded matters such as: encroachments, unrecorded easements, access and loss of priority.

Supplemental taxes
Usually within 4-6 months after recordation of the grant deed, the County Tax Collector will send you a supplemental tax bill. This tax bill is a pro-rated bill based on the difference of the existing assessment and the new assessment as of date of close of escrow. Your new assessed tax valuation can be from 1.025% to 1.25% of the sales price, depending on the area in which you purchased your property.
Closing costs for seller and buyer in addition to the lender’s fees:
  • Title and escrow fees
  • Recording fees
  • Document preparation fees
  • Home Warranty, if applicable
  • Termite inspection fee and repair, if applicable
  • Inspection fees: roof, property, septic, water conservation, zoning, etc.
  • Fire and flood (if applicable) insurance premium for one (1) year
  • Tax pro-rations. If the property produces income, there will also be proration of rents and check deposits
  • Messenger/Federal Express fees
  • Notary fee
  • Demand fees from existing lenders
  • County transfer tax. Some cities also assess a transfer tax
  • City and/or county reports, if applicable
For Condominiums or Planned Unit Development:
  • Homeowner’s Association transfer fees, one (1) month dues paid in advance plus proration of homeowners dues
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