What Are Closing Costs and How Much Should I Expect to Pay?
Closing costs are the fees and expenses paid at the end of a real estate transaction, in addition to the down payment. For buyers in California, closing costs typically range from 2% to 5% of the purchase price, though the exact amount depends on your loan type, lender, property, and location.
What Closing Costs Include
Lender fees (origination, underwriting, processing), title insurance, escrow fees, recording fees, appraisal fee, credit report fee, prepaid items (homeowner's insurance, property taxes, prepaid interest), and mortgage insurance which may involve upfront and/or ongoing costs depending on the loan program.
Buyer Closing Costs
Typically 2% to 5% of the purchase price. On a $600,000 home, that is approximately $12,000 to $30,000. The exact amount varies by loan program and lender.
Seller Closing Costs
Sellers typically pay real estate agent commissions, county and city transfer taxes, escrow fees for their portion, and any negotiated repair credits or concessions. Seller costs vary significantly by transaction.
How to Reduce Closing Costs
Some costs can be negotiated through seller concessions, lender credits, or by comparing fees from multiple lenders. Down payment assistance programs may also cover some closing costs.
Local Context
Some Bay Area cities and counties have additional transfer taxes beyond the county level. Eduardo can help you understand what additional costs may apply in your specific area.
Important note: Closing costs are estimates and vary by transaction. Your lender will provide a Loan Estimate early in the process that details expected closing costs for your specific situation. Review this carefully and ask questions about any charges you do not understand.
Helpful Resources
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Understanding your estimated closing costs early in the process helps you plan financially. Contact me to discuss what to expect.
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