What Will I Pay at Closing as a First-Time Buyer in Orange County?

The total you bring to escrow is called your "cash to close." It has two parts: your down payment and your closing costs.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. I walk first-time buyers through every line of their numbers before they write an offer, so they know what to expect on closing day.

The Consumer Financial Protection Bureau (CFPB) lists appraisal fees, title insurance, government taxes and prepaid expenses among the common ones. Here is how they group together:

• Lender fees. Origination or underwriting fees, the appraisal, the credit report and any points you choose to pay. These vary by lender.
• Escrow fees. The neutral escrow company holds the money and documents. Your share of the fee is set in the purchase agreement.
• Title insurance. Your lender requires a policy that protects its loan. You can also have an owner's policy that protects you. Who pays for which policy is part of the contract.
• Recording fees. The County Recorder charges to record your deed and loan documents.
• Prepaid interest. Interest from your closing date to the end of that month.
• Homeowners insurance. Lenders typically want the first year's premium paid at or before closing.
• Property tax proration. You and the seller split the current tax bill based on the closing date. The Orange County Treasurer-Tax Collector notes that proration is handled strictly between buyer and seller in escrow.
• Impounds. If your loan has an escrow, or impound, account, the lender collects a starting balance so it can pay your taxes and insurance later. The CFPB explains that your lender uses this account to pay your property taxes and insurance.

HOA items. If you buy a condo or townhome, there may be HOA transfer or move-in fees, and you may prorate that month's dues. Who pays which fee is spelled out in the purchase agreement, so we read that section together before you sign.

Documentary transfer tax. The Orange County Clerk-Recorder's transfer tax form sets the county rate at $0.55 for each $500 of value, which works out to $1.10 per $1,000. On a $900,000 home, that's about $990. The purchase agreement states who pays it. In many Orange County sales the seller pays this tax, yet it's a contract term, so confirm it in your offer.

Yes. In California, a home is reassessed when it sells. The Orange County Treasurer-Tax Collector explains that new owners usually receive a supplemental property tax bill within about a year of buying, covering the difference between the old and new assessed value. Some buyers receive more than one.

The Treasurer-Tax Collector also notes that mortgage companies do not usually pay supplemental bills, even with an impound account. Set money aside for it after you close.

A seller credit is money the seller agrees to put toward your closing costs. It's written into your offer and shows up on your closing statement.

The CFPB is clear that a credit isn't free. Sellers will often ask for a higher price in exchange, and the cost is then paid through your loan instead of out of pocket. Lender credits work the same way: the lender typically raises the loan amount or charges a higher rate in exchange.

Your loan program also limits how large a seller credit can be, so ask your lender for your limit before we write the offer.

Assistance can help too. CalHFA's MyHome Assistance Program is a deferred-payment junior loan for first-time buyers that can be used for down payment and/or closing costs, up to 3.5% of the price on CalHFA FHA loans and up to 3% on CalHFA conventional loans. Income limits and a homebuyer education course apply.

1. Get a Loan Estimate. The CFPB says your lender must provide it within three business days of receiving your application. Page 1 shows estimated closing costs and cash to close.
2. Compare more than one lender. Fees and rates differ, and the Loan Estimate makes side-by-side comparison easier.
3. Ask about impounds and prepaids. These change with your closing date and insurance quote.
4. Review your Closing Disclosure. The CFPB requires you to receive it at least three business days before closing. Compare it to your Loan Estimate and ask about anything that changed.

If you want to see what your closing number could look like, I'd love to map it out with you before you tour homes. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.