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A California mortgage or refinance will come with closing costs.

Tim Worstall
LoanBiz Columnist

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Those closing costs can be an appreciable fraction of the mortgage or refinance. This is not unique to a California mortgage or refinance of course, but closing costs can be substantial so it's worth making sure that you understand what it is that you will owe. The closing costs will be made up of a series of different items, some of which will be under the control of the mortgage company you are borrowing from and some which won't be. The largest closing costs will probably be origination fees on the California mortgage or refinance. There may also be prepaid expenses--which aren't fees for getting the loan but are costs of home ownership--such as insurance and taxes. The fees charged by the mortgage broker or lender largely cover processing and underwriting the application and funding the loan.

Make sure you understand the good faith estimate (GFE) of your closing costs.

Your mortgage lender will provide you with a good faith estimate of what the closing costs will be. Make sure you understand that it is an estimate: some of the costs on a California mortgage or refinance will be well known, others, like surveys and pest inspections can be more variable; it depends on who does them and what the results are while they are doing them as well. But once you have this estimate you can then make sure you have enough cash spare to pay them. You might also consider taking a higher interest rate and having the lender pay some or all of the fees for you.


About the Author
Tim Worstall has a degree in finance and accountancy and writes extensively on matters economic and financial.

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