What Are Closing Costs, and How Can You Plan for Them?

Whether you’re buying or selling a home in Orange County, closing costs are an essential part of the process that can sometimes catch people by surprise. Brett and Dane Smith of Notch Luxury Properties explain the common fees associated with closing costs to help you prepare.

What Are Closing Costs?

Closing costs are fees paid at the final stage of a real estate transaction. Both buyers and sellers are responsible for certain costs, which typically range from 2% to 5% of the home’s purchase price.

Typical Closing Costs for Buyers

1. Loan Origination Fees
These are fees charged by the lender to process your mortgage.

2. Appraisal and Inspection Fees
An appraisal verifies the home’s value, while inspections assess its condition.

3. Title Insurance
This protects you and your lender against potential disputes over property ownership.

4. Escrow Fees
These cover the costs of the escrow agent who facilitates the closing process.

5. Prepaid Expenses
This includes homeowners insurance, property taxes, and interest due at closing.

Typical Closing Costs for Sellers

1. Real Estate Agent Commission
The commission, usually 5-6% of the sale price, is typically the largest cost for sellers.

2. Title Transfer Fees
These fees are associated with transferring the title from the seller to the buyer.

3. Outstanding Liens or Taxes
Any unpaid property taxes or liens need to be settled at closing.

How Can You Prepare for Closing Costs?

It’s essential to budget for closing costs ahead of time. As a buyer, these fees will appear in your final settlement statement, while as a seller, they’ll be deducted from the sale proceeds. For a personalized estimate or questions about closing costs in Orange County, reach out to Brett and Dane Smith at Notch Luxury Properties for expert guidance.