Closing Costs

When you buy your first home the closing costs are, quite frankly, shocking.  It seems everyone has their finger in the pie.  Why is it so expensive? 

A little perspective helps a lot here.  Let's start by remembering how much money you are borrowing.  If you live in Silicon Valley your mortgage represents a lot of money.  Someone is about to hand you a check for hundreds of thousands of dollars.  In almost all cases you've never borrowed that much before and you don't have experience paying that much money back.  While I find the process onerous myself sometimes, I don't wonder why so many people are involved.  The checks and balances are necessary because there is simply so much money at stake.  Each check and balance represents someone's labor or risk, and each one needs to be paid.

So when you first review your costs yes, you will be shocked and you may feel a little taken advantage of.  But please remember how much money you are asking to borrow...

Good Faith Estimate

You will receive an initial "Good Faith Estimate" of closing costs at the time the loan of your loan application.  This estimate is based on my experience and should include all the closing costs.  However, if your loan is not locked yet -- which it probably won't be -- then many of the costs are subject to change, simply because they can't be predicted until your loan is locked.  Similarly, if you are buying a home and you have not yet gone into contract on a home, many of the non-lender costs (e.g. title insurance, escrow fees, etc.) cannot be accurately estimated because we simply don't know.

This can be very frustrating for clients who naturally want some measure of predictability.  While no lender can guarantee your costs until you've locked your loan, there are certain things we can do so that you can be confident that when you do lock you have the best deal possible.  First, after we've disclosed what we intend to earn on your loan we stick to that.  Unlike banks or direct lenders, we fully disclose our earnings at final sign-off so that you can audit it and hold our feet to the fire.  If we say we will make x, we make x and no more.

With access to over 30 lenders we also shop for the most competitive rates and costs.  Then we guide you through the process of choosing how to trade off up-front costs against your interest rate, making sure your lifetime cost of borrowing is as low as possible.  After all, we work for you, not the lender.  We want as much of your money as possible to stay in your pocket where it belongs.

MOST of the standard closing costs you will see in your Good Faith Estimate are listed below.  They will vary depending on your situation, the lender and the title company.  If you have questions about your specific situation, please call me at (408) 348-3442.