Thursday, December 06, 2018 / by Joe Corbisiero
Understanding your closing costs is imperative when you’re buying a home. As with any business transaction, there are costs of doing business when buying a new home. Your closing costs are in addition to your down payment. This is something you should anticipate ahead of time so that you are not surprised at the closing table.
Closing costs naturally will vary from city to city, but overall this can give you a good idea of the typical closing costs to expect. Make sure you take note of these and ask your agent or lender to give you some good rough estimates before you put an offer on a house.
Closing Costs To Expect In San Diego
1.) Home Inspection! When you buy a house you will get a home inspection completed to confirm what you are buying is in working order. The home inspection will be performed by a licensed inspector who you will pay at the time of the inspection. The home inspection is a very important part of the home buying process. One the biggest nightmares any homebuyer can face is to discover costly defects on a house after they close on it. Inspecting your house will occur after you receive an accepted offer for the property.
In California, it is very standard that the buyer has 5 business days to conduct a home inspection. Any items that need attention revealed at the home inspection become negotiable. You have the right to ask the home seller to either give you a credit for the necessary repairs or have them repaired at their expense. A home inspector’s cost will vary depending on who you are hiring and the size of the home that is being inspected. Make sure you ask the home inspector you hire their fee so you can be prepared to pay them at the inspection. You should budget $350-$675 for the home inspection. I consider this part of your closing costs since it is associated with the overall home buying process even though it is paid prior to closing.
2.) Lender fees! Your mortgage broker or lender will have closing costs. You should receive what is known as a Good Faith Estimate(GFE), which should have all of your estimated closing costs outlined. Make sure you review your Good Faith Estimate with your lender so that all your questions can be answered up front instead of at the closing table. This is one of the simple things you can do up front to avoid headaches later.
One of the lender fees is to pay for an appraisal of the property. Your lender wants to make sure the property they are lending you money for is NOT being purchased for more than what it’s worth. You should take comfort knowing that the lender is also concerned about the value of your property in addition to your real estate agent. Your total lender closing costs should not exceed $1,500. Most lenders will have very similar fees and should not range far from each other. When you are trying to figure out your intended purchase price you should also get an idea of your closing costs.
3.) Title fees! Your closing will be done at a title company. Some of your closing costs will be paid to the title company you close it. In San Diego, it is customary that the seller’s side of the transaction order title from their preferred title company. You are paying the title company to use their services. A title company is a place where all money is wired in, title/deed is transferred to the new buyer, and where you close the transaction.
Both the buyer and the seller will incur title closing costs. They can range anywhere from $400-$1,000 on the buyer’s side but will vary depending on where you close. The seller’s attorney should send you a title disclosure form with the preferred title company’s current rates. Make sure whoever is representing you lets you know what your title company closing costs will be.
4.) Transfer taxes/stamps! When you purchase a property you will have taxes to pay at closing. It is customary in California that the buyer pays the city transfer stamps. In California, stamps tend to range from $1.10 per thousand dollars spent. It is pretty easy to look up what your city transfer taxes will be based upon the city you are purchasing a property in. For example, if you are buying a $300,000 home in the city of San Diego you transfer stamps would be approximately $330 ($7.50 x 300). Make sure you know what transfer taxes you are responsible for and what they cost before you go to closing. The last thing you want to do is be surprised at the closing table!
Your lender is probably your fastest resource in finding out what your actual closing costs will be. They will receive numbers from the title company and be able to give you exact figures as closing nears. They will also send you what’s known as a Truth in Lending Act Disclosure that also breaks down the closing costs pretty accurately. Use the above checklist to give you a good baseline for now. Also, don’t forget that some of your closing costs may be tax deductible.
San Diego Closing Costs
One of the things I do upfront with all my clients is give them a breakdown on their estimated closing costs so they know what the total amount of money needed to close the transaction is. This is one of the services I provide to my clients to help them prepare for their total out of pocket costs to buying a house.
If you are looking to buy a new home and want an aggressive and surprise-free home buying experience I promise you nothing but the best results or I’ll literally help you move. It’s only a conversation and you can see if I know what I’m talking about.