When purchasing or refinancing a home, closing costs are a part of every transaction. But you don’t necessarily have to be the one paying for them!

The basic closing costs for any real estate transaction include escrow and title fees, lender fees (including appraisal fee), pre-paid interest, property taxes, and insurance. Closing costs, on average, are 1-2% of the purchase price for a purchase loan, and $3k for a refinance.

 

HOW TO PAY NO CLOSING COSTS:

Sellers, lenders, realtors, and gift donors are all allowed to contribute towards closing costs.

Seller credits can be negotiated as part of the contract negotiations between the buyer and seller.

Lenders have the ability to generate “lender credits” by increasing the interest rate from the going rate.

Realtors are allowed to contribute using their commission (though it rarely happens).

Gift donors are family members who contribute money towards the purchase of the property.

If you have the down payment on a home you want to purchase and are merely missing some or all of the closing costs, don’t let a good deal pass you by. Sellers, lenders, realtors, and family members can all help you get the closing costs paid. Take advantage of the opportunity to get into a property!

When buying, selling, or refinancing a property, the services of an escrow company will be necessary. Here are the top 10 things you need to know about escrow:

1. An escrow company is a neutral third party licensed by the California Department of Business Oversight. It receives and disburses money and documents and acts as an intermediary between the buyer, seller, lender, and realtor and follows written instructions provided by them.
2. Most accurately, the word “escrow” refers to “money held by a third-party on behalf of transacting parties.” Practically, we use the word escrow as short-speak for “escrow company” or “escrow time period.”
3. Escrow time periods are 30-45 days on average but can be anything the buyer and seller agree upon.
4. Home owners choose the escrow company. Realtors and lenders make recommendations to the home owner as to which escrow company to choose.
5. Escrow must be “opened” within 3 days of an accepted offer by a seller. “Opening escrow” is the process of hiring the escrow company and providing escrow instructions and all deposit monies to them. Realtors open escrow for purchase transactions. Lenders open escrow for refinance transactions. But any party in the transaction may open escrow.
6. Escrow companies charge for their services. Both the buyer and seller split the cost of those services the vast majority of the time. Escrow fees are calculated based on the price of a purchase transaction and are a fixed cost for most refinance transactions.
7. Buyers, sellers, realtors, lenders, and escrow agents all work as a team to get the transaction finalized. Each party has various contractual obligations and responsibilities— nothing is more enjoyable than when all parties are working in sync as a team!
8. Escrow must “close” at the agreed upon time period. Closing escrow means all requirements have been met, the title of the property has been transferred to the buyer, and a new deed has been recorded at the county.
9. Legal consequences may be imposed if a buyer or seller does not meet all their contractual obligations within the agreed upon time period
10. An escrow company is in charge of the handling monies as well as the signing of loan documents with the buyer. Buyers give their earnest money deposit, down payment, and closing costs to the escrow company. Sellers receive the proceeds of the sale from escrow. Escrow disburses commissions to the agents.

Home buyers are the most excited at the beginning of the home buying process, the most nervous during the escrow period, and the most relieved when escrow closes. Escrow officers are an integral part of the team when buying, selling, or refinancing a property. Remember your friendly escrow officer and consider a thank you call or email after escrow closes. They will absolutely love you for it.