What are Closing Costs?
The term closing costs refers to the fees and charges that the buyer and the seller are required to pay for at the closing, or settlement, of a real estate transaction. Generally, the buyer is responsible for most of the closing costs. However, in some instances, the buyer may convince the seller to shoulder some or all of the costs. These fees and charges differ by state and municipality, so a homebuyer would benefit from working with a qualified and experienced real estate professional who can provide them with all the relevant information that would enable them to negotiate and get the best deal out of their home purchase.
Average San Gabriel Valley, CA Buyer’s Closing Costs
Homebuyers in San Gabriel Valley, CA can expect to pay closing costs from 0% to 3% of the purchase price. Mortgage fees typically cost around 1% of the loan, but this can be reduced to zero by increasing the interest rate. Escrow fees in Southern California are around $250 plus $2.50 per $1,000 of the sales price; so, a $300,000 home would have an escrow fee of $1,000. While buyers can negotiate with the seller to purchase a one-year home warranty policy on their behalf, they would have to incur the cost if the seller refuses and the cost will range from $350 to $550.
The cost of fire insurance policies on average ranges from $600 to $1,000. If the buyer is getting a mortgage, the lender will require a home appraisal and this costs about $350 to $600, depending on the type of loan and the type of property. Credit check fee ranges from $20 to $35. The buyer is also responsible for the cost of a home inspection, which ranges from $250 to $500. Some of the miscellaneous fees that buyers may have to pay for are those for notary, loan document signing, processing, wire and delivery, endorsements or even sub-escrow, and these fees can range from $10 for each notary signature to a few hundred dollars for sub-escrow fees.
Average San Gabriel Valley, CA Seller’s Closing Costs
Home sellers in San Gabriel Valley, CA, in general, pay around 6% to 8% of the home purchase price in closing costs. The commission fees for the listing agent and buyer agent range from 1% to 8%, depending on service level, market cycle, and type of sale. Agent commissions are usually low in hot seller’s markets and higher in buyer’s markets. Full-service agreements tend to cost more compared to limited MLS-only services. Also, short sale agents typically charge more than standard sale agents.
The fees that sellers pay the escrow company that processes the home sale transaction cost around $250 plus $2.50 per $1,000 of the sales price. Sellers also purchase title insurance for the benefit of the buyer, in case of unforeseen liens after the sale, and this costs about 25% to 50% of the sales price. Transfer taxes in Los Angeles County is 0.11% of the sale price. The natural hazard disclosure report, which is required by law, costs around $90 to $125.
If the property is in an HOA, the buyer will have to request for HOA documents that contain information about the financial health of the HOA, and these would cost around $150 to $350. If the buyer agrees to purchase the one-year home warranty policy on behalf of the buyer, this would cost them around $350 to $550.
Breakdown of Closing Costs for Homebuyers in San Gabriel Valley, CA
- Mortgage Fees
- Title Insurance
- Miscellaneous Fees
- Home Warranty
- Property Taxes
- Fire Insurance
- Credit Check
- Home Inspection
- Miscellaneous Insurance
- Real Estate Commission
- Title Insurance
- Transfer Taxes (County and City)
- Natural Hazard Disclosure
- Homeowner Association Document and Transfer
- Home Warranty
- Septic Certification
- Miscellaneous Fees
Closing Cost Tips for San Gabriel Valley, CA Homebuyers
Fees and charges related to closing can be quite overwhelming, especially to first-time buyers, but these are not set in stone and there are a few things you can do to reduce these. If you are in the market to buy a house in San Gabriel Valley, California, here are a few things you can do to lower your closing costs:
1. Find Out Which Services You Can Shop For
A lot of homebuyers know that they can shop around for mortgage rates, but what they don’t know is that this is not the only fee that you can shop for. Other items listed under the buyer’s closing costs that you can shop around for are title insurance and pest inspection fees. To know what other fees and charges you can reduce, check the details on your Loan Estimate.
2. Check Your Loan Estimate to Know Which Fees are Fixed
One important thing you need to remember is that not all of the fees listed on your Loan Estimate are fixed. For example, if you use a company recommended by your, some of the fees, such as title services, lender’s title insurance, and owner’s title insurance cannot go up over 10% at closing. However, if you decide to use other service providers that are not listed in your Loan Estimate, there is no limit as to how much these costs may increase.
3. Ask Your Lender About Discount Points
Contrary to what homebuyers are usually advised, you don’t always have to pay discount points in order to get a lower interest rate. According to some experts, it is not advantageous for homebuyers to pay points when mortgage rates are already low. But if you plan on keeping the property long term, you might still benefit from paying points. To know whether to get discount points or not given your specific situation, it is best to ask your lender.
4. Be Wary of Estimates That are Too High or Too Low
Closing costs vary by state and municipality but the amounts should be reasonably comparable, not too high or too low. So, if you see any third-party charges that are too far from the average, ask the lender about these before you decide to use them as your lender or title insurance provider.
5. Schedule Your Closing Date at or Near the End of the Month
Setting your closing date towards or at the end of the month can greatly help you save on prepaid interest, which accrues from the closing date to the end of the month. By scheduling the settlement date towards the end of the month, your prepaid rate becomes lower since the number of days in between these two dates are less.
If you are looking to buy a home in San Gabriel Valley, California, our team will be very happy to show you all your best options in this area. Give us a call at (626) 915-4164 or send us an email at [email protected] if you have any questions or if you’d like to schedule an appointment.