Understanding
Closing Costs
Closing costs are the fees and expenses you pay when finalizing your mortgage. Learn exactly what to expect, who pays what, and how to negotiate — so nothing catches you off guard on closing day.
Last updated: March 2026
How Much Are
Closing Costs?
Closing costs typically range from 2% to 5% of the loan amount. On a $600,000 home with a $540,000 loan (10% down), you can expect closing costs between $10,800 and $27,000. The exact amount depends on your loan type, lender, location, and the specific services required for your transaction.
These costs are separate from your down payment and are paid at the time of closing (or rolled into the loan in some cases). Your lender is required to provide a Loan Estimate within three business days of receiving your application, detailing estimated closing costs so you can plan accordingly.
At Theós Financial, we provide transparent, itemized cost breakdowns from the very first conversation. No hidden fees, no surprises. You will know exactly what you are paying and why before you commit to anything.
Fees Charged by
Your Lender
These are the costs associated with originating and processing your mortgage loan. They appear in Section A of your Loan Estimate and Closing Disclosure.
Origination Fee
The lender's charge for processing your loan application, underwriting, and funding. Typically 0.5% to 1% of the loan amount. On a $500,000 loan, that is $2,500 to $5,000. Some lenders charge a flat fee instead. As a broker, Theós Financial shops multiple lenders to find the best combination of rate and fees.
Discount Points
Optional prepaid interest that lowers your mortgage rate. One point equals 1% of the loan amount and typically reduces your rate by 0.25%. Whether points make sense depends on how long you plan to keep the loan — if you will stay in the home long enough to recoup the upfront cost through lower payments, points can save you significant money over time.
Appraisal Fee
The cost of a professional appraisal to determine the property's market value. Required by all lenders to ensure the property is worth the loan amount. Typical cost: $500 to $800 for a single-family home, more for multi-family or unique properties. Paid upfront at the time the appraisal is ordered.
Credit Report Fee
The cost of pulling your credit report from the three major bureaus (Equifax, Experian, TransUnion). Typically $30 to $75. This is a hard inquiry that may temporarily affect your credit score by a few points, but multiple mortgage inquiries within a 45-day window are counted as a single inquiry.
Underwriting Fee
A fee charged by some lenders for the underwriting process — the detailed review of your financial profile, property, and loan terms. Typically $400 to $900. Not all lenders charge this separately; some include it in the origination fee.
Flood Certification
A fee for determining whether the property is in a FEMA-designated flood zone. If it is, you will be required to carry flood insurance. Typical cost: $15 to $30. Most properties in the Santa Clarita Valley are not in flood zones, but the certification is required regardless.
Title, Escrow, and
Other Services
These are fees paid to third parties involved in the transaction — title companies, escrow officers, government agencies, and insurance providers.
Title Insurance
Two policies are typically required: a lender's title policy (required by the lender to protect their interest) and an owner's title policy (optional but highly recommended to protect your ownership). Title insurance protects against defects in the title — liens, encumbrances, or ownership disputes that were not discovered during the title search. In California, the seller traditionally pays for the owner's policy, and the buyer pays for the lender's policy. Combined cost: typically $1,500 to $3,500 depending on the purchase price.
Escrow Fees
Escrow is the neutral third party that holds funds and documents during the transaction and coordinates the closing. Escrow fees in California are typically split between buyer and seller and are based on the purchase price — usually around $2 per $1,000 of the purchase price, plus a base fee. On a $700,000 home, expect escrow fees of approximately $1,500 to $2,500 (your half).
Recording Fees
County charges for recording the deed and mortgage documents in the public record. In Los Angeles County, recording fees are based on the number of pages and the document type. Typical cost: $100 to $250 for a standard residential transaction.
Transfer Tax
In California, the county documentary transfer tax is $1.10 per $1,000 of the purchase price. On a $700,000 home, that is $770. Some cities impose an additional city transfer tax. In Santa Clarita (LA County, unincorporated area), only the county tax applies. The seller typically pays the transfer tax in California, though this is negotiable.
Home Inspection
While technically not a closing cost (it is paid before closing), the home inspection is an essential expense. A general home inspection costs $350 to $600 depending on the home's size. Specialized inspections for termites, sewer lines, roof, chimney, or pool are additional. Total inspection costs can range from $500 to $1,500.
Costs Paid in
Advance
Prepaid items are not fees — they are advance payments for ongoing costs like property taxes, homeowners insurance, and mortgage interest. They ensure these essential obligations are covered from day one.
Prepaid Property Taxes
Your lender will collect several months of property taxes at closing to establish your escrow account. The exact amount depends on your closing date relative to the tax due dates. In California, property taxes are due in two installments (December 10 and April 10). Expect to prepay 2-6 months of property taxes at closing.
Homeowners Insurance Premium
Your first year's homeowners insurance premium is typically paid at or before closing. In the Santa Clarita Valley, annual homeowners insurance averages $1,500 to $3,000+ depending on the home's size, age, construction, and proximity to wildfire zones. You may also be required to carry additional fire insurance.
Prepaid Mortgage Interest
You will pay interest on your new mortgage from the closing date through the end of that month. If you close on the 15th, you owe 15-16 days of interest. This is why closing at the end of the month reduces your prepaid interest cost — but it also means your first monthly payment is due sooner.
Mortgage Insurance (if applicable)
If your down payment is less than 20%, you will likely pay private mortgage insurance (PMI) for conventional loans or an upfront mortgage insurance premium (UFMIP) for FHA loans. FHA's UFMIP is 1.75% of the loan amount, which can be financed into the loan. Conventional PMI is paid monthly and varies based on credit score and LTV.
Who Pays What, and
How to Negotiate
In California, many closing costs are negotiable between buyer and seller. Understanding the customary splits and negotiation strategies can save you thousands.
Seller Concessions
You can negotiate for the seller to pay some or all of your closing costs. This is called a "seller concession" or "seller credit." FHA allows up to 6% of the purchase price in seller concessions. Conventional allows 3-9% depending on your down payment. This is a powerful tool, especially for cash-strapped first-time buyers.
Lender Credits
You can accept a slightly higher interest rate in exchange for the lender covering some of your closing costs. This is the opposite of paying discount points — you trade a higher rate for lower upfront costs. This makes sense if you plan to refinance or sell within a few years.
Shop Third-Party Services
You have the right to shop for many third-party services, including title insurance, escrow, home inspections, and homeowners insurance. Getting multiple quotes can save hundreds or even thousands of dollars. Your Loan Estimate identifies which services you can shop for.
Get a Detailed
Cost Estimate
At Theós Financial, we believe in full transparency from the very first conversation. Get a Quick Quote to see estimated closing costs alongside your rate, or call us for a detailed breakdown tailored to your specific situation.