Are closing costs the part of homebuying that worries you most? You are not alone. Many Moreno Valley buyers feel unsure about what they will owe beyond the down payment and when those numbers become final. In this guide, you will learn what closing costs cover, what is customary in Riverside County, and smart ways to reduce how much cash you bring to the table. Let’s dive in.
What are closing costs
Closing costs are the one-time fees you pay to get your home and loan finalized. They usually include lender charges, title and escrow services, inspections, and prepaid items like taxes and insurance. These costs are separate from your down payment. As a working estimate, plan for about 2% to 5% of the purchase price. Your exact number depends on your loan type, lender, timing, and property.
What you will pay in Moreno Valley
Local customs in Southern California influence who pays certain items. In much of our region, the seller often buys the owner’s title policy, and the buyer pays for the lender’s title policy and any lender-required endorsements. Escrow fees are commonly split, but this is negotiable. Always confirm the details in your purchase agreement and with your lender and escrow officer. Some cities and counties in California charge transfer taxes. Confirm current policy and amounts with the Riverside County Recorder or the City of Moreno Valley. Recording fees and county assessment fees are typically modest flat amounts.
Loan and lender costs
These fees come from your mortgage process and vary by lender and loan program:
- Loan origination or application fee: sometimes a percentage of the loan amount, such as 0.25% to 1.0%, or a flat fee. Some lenders offer a no-origination option with a higher rate.
- Discount points: optional prepaid interest to lower your interest rate. One point equals 1% of the loan amount. Paying points raises your cash due at closing.
- Underwriting, processing, and credit report: smaller flat fees. A credit report is usually under $100.
- Appraisal: most loans require it to confirm value. In Southern California a standard single-family appraisal often runs in the mid-hundreds to low-thousands, commonly about $450 to $900 for a typical property.
- Mortgage insurance if applicable: PMI for conventional loans with less than 20% down; FHA loans have mortgage insurance premiums; VA loans usually avoid monthly mortgage insurance but may include a funding fee. Your lender will outline which apply to you.
Title and escrow costs
Title and escrow protect your ownership and manage the transfer of funds and documents:
- Title insurance: an owner’s policy protects you, a lender’s policy protects the lender. In our area the seller often pays for the owner’s policy, and the buyer pays for the lender’s policy. This is negotiable. Title premiums are one-time fees based on set rate tables.
- Escrow fees: charged for coordinating the closing. These are often split, but the contract governs. Ask escrow for a fee quote early.
- Recording fees: Riverside County charges modest fixed amounts to record your deed and mortgage.
Inspections and reports
Inspections help you understand the home’s condition before you close:
- General home inspection and pest or termite inspection: typically buyer-paid. Expect a few hundred dollars, often $300 to $800 or more depending on scope.
- Appraisal: if you are financing, plan on the appraisal fee noted above.
- Disclosures and reports: items like a natural hazard disclosure or preliminary title report may appear on your closing statement. Who pays is set by custom and contract.
Prepaids and reserves
These items are not fees for services. They prepay taxes, insurance, and interest so you are covered after closing:
- Property taxes: prorated between buyer and seller based on the closing date. Your lender may also collect an initial tax deposit if you have an escrow or impound account.
- Homeowner’s insurance: most lenders require you to pay the first year’s premium at or before closing.
- Prepaid mortgage interest: covers interest from the day your loan funds until your first payment.
- HOA dues and assessments: if the property has an HOA, dues and any transfer fees may be collected or prorated.
Government and local fees
- Documentary transfer taxes or city transfer taxes: these vary by county and city. Verify with Riverside County or the City of Moreno Valley to see what applies to your purchase.
- Recording and county assessment fees: typically modest fixed costs collected when the deed and loan are recorded.
Ways to lower your cash to close
You have several options to reduce out-of-pocket costs. A good lender and agent will help you compare the tradeoffs.
- Seller credits or concessions: the seller can contribute toward your closing costs within program limits.
- FHA: up to 6% of the sales price.
- VA: generally up to 4% for concessions, plus certain allowed items.
- Conventional: limits depend on your down payment and occupancy. Ask your lender for the current percentages for your scenario.
- Lender credits: you may accept a slightly higher interest rate in exchange for a credit that covers some closing costs. This lowers cash at closing but increases your payment over time. Use your Loan Estimate to compare.
- Rolling some costs into the loan: certain costs can be financed if the program allows. This raises your loan amount and long-term interest.
- State and local assistance: programs such as CalHFA and GSFA may offer down payment or closing cost help for eligible buyers. City or county programs may also be available. Availability changes, so check with a knowledgeable lender.
- Gift funds: many loan programs allow gift funds from family for down payment and sometimes closing costs. Your lender will require a gift letter and documentation.
- Shop and compare: request Loan Estimates from at least two to three lenders and compare title and escrow quotes. Small differences in fees and rates add up.
- Be strategic with inspections: shop reputable inspectors and set the right scope. Do not skip your due diligence.
What to expect from pre-approval to keys
Understanding the timeline helps you stay on top of deadlines.
- Pre-approval: your lender reviews credit, income, and assets, then issues a pre-approval letter. This clarifies your budget and strengthens your offers.
- Offer accepted and escrow opens: you deposit earnest money and escrow orders title work.
- Within 3 business days of loan application: your lender provides a Loan Estimate. Review it to understand fees, rate, and your projected cash to close. Compare if you shopped multiple lenders.
- Before closing: complete inspections, secure homeowner’s insurance, and review HOA documents if applicable. Lock your rate if you have not already.
- At least 3 business days before you sign loan documents: your lender must deliver a Closing Disclosure. Compare it to your Loan Estimate and ask about any changes.
- Closing day: sign documents, send final funds via wire or cashier’s check per escrow instructions, then escrow records and you receive keys.
What documents to gather
Having paperwork ready speeds up pre-approval and helps you receive accurate estimates.
- Two recent pay stubs or two years of tax returns if self-employed, plus a profit and loss statement if asked.
- Two to three months of bank and asset statements.
- Photo ID and Social Security number.
- Documents for large deposits and any debts such as student loans, auto loans, and credit cards.
- Gift fund documentation if you will receive help from family.
Smart budget examples
Use these simple figures to set a starting budget, then ask for precise quotes.
- On a $500,000 purchase, 2% to 5% in closing costs equals about $10,000 to $25,000, not counting your down payment.
- On a $350,000 purchase, 2% to 5% equals about $7,000 to $17,500. These are illustrative ranges. Your loan type, title premium, escrow deposits, and local fees will determine the final number.
Make a confident move
You deserve clear numbers and a steady guide from offer to keys. If you want to lower your cash to close, line up seller credits, or compare lender options, start with a strong pre-approval and local fee quotes. I can help you coordinate lenders, title, and escrow so you understand each line item and negotiate with confidence. Ready to map out your closing costs and timeline in Moreno Valley? Connect with Jose Lemus for a no-pressure consultation in English or Spanish. We will review your goals, your budget, and your best path to the keys.
FAQs
How much should a Moreno Valley buyer budget for closing costs?
- A practical estimate is 2% to 5% of the purchase price, then confirm with a lender’s Loan Estimate and title or escrow quotes.
Who usually pays for title insurance in Riverside County?
- In much of Southern California the seller often pays for the owner’s policy, while the buyer pays for the lender’s policy, but it is negotiable and set by contract.
Can the seller pay my closing costs with FHA, VA, or conventional loans?
- Yes, within program limits. FHA allows up to 6%, VA generally allows up to 4% for concessions, and conventional limits vary by down payment and occupancy.
What prepaid items increase cash needed at closing?
- Property tax deposits for your escrow account, the first year of homeowner’s insurance, and prepaid mortgage interest from funding to your first payment.
When do I see a final, accurate closing number?
- Your lender must deliver a Closing Disclosure at least 3 business days before you sign. Review it carefully against your Loan Estimate.
Are there assistance programs for first-time buyers in Moreno Valley?
- State and local programs such as CalHFA and GSFA sometimes offer down payment or closing cost help. Availability and eligibility change, so check with a qualified lender.
