San Diego Closing Costs for Buyers
/SUMMARY
The amount of cash needed on top of the down payment to purchase a home can vary greatly depending on a lot factors, such as the purchase price, loan terms, and even the day of the month that you close.
In San Diego, it is usually somewhere around 1-3% of the purchase price.
Here are estimates of the costs you can expect:
Upfront Costs:
- Inspections: $500 - $600+
- Appraisal: $400 - $600
Paid At Closing:
- Lender Fees: $1,500 - $2,000
- Escrow Fees (incl. misc.): $1,000 - $3,000
- Title Fees (incl. misc.): $800 - $1,500
- Prepaids & Impounds*: $1,000 - $10,000
*Prepaids & Impounds are not really costs of closing the transaction, but you still need to provide the funds at closing. You are pre-paying certain items (mortgage interest, insurance, property taxes, etc.).
Obviously there are a lot of variables affecting how much cash is needed on top of the down payment. To get a more accurate estimate based on your specific situation, CONTACT ME for a free, no obligation consultation.
TRANSCRIPT
Hey it's Emil Ayoub your Realtor in San Diego, helping you make moves with confidence.
I want to talk about buyer closing costs.
A lot of first time Home buyers are often surprised to learn that you need more cash than just the down payment to purchase a home. I'm here to educate you on the subject so you'll know how much money you'll really need to really buy your new home.
And if you don't have the extra cash for closing costs... DON'T WORRY... there are other options so you don't have to pay for this out of pocket. I won't go whatover that on THIS video for time's sake.
Keep in mind these costs I'm going to go over are just estimates, they may not cover every single item there may be and the amounts will vary depending on the size of the transaction, the servicers, and especially if you're in another part of the country. This is a simplified rundown to give you a rough idea of what to expect....
So here we go...
#1 are Inspection costs. So there are two main inspections that you're going to want to get and those are the general home inspection, which typically runs around $400-500... and the pest inspection, which is usually about $75. So all together, these will be somewhere around $500-600. And after the general inspection there may be other inspections needed, which will cost extra, like having a roofer come out if there is a concern over the roof.
The #2 cost is the Appraisal Fee. Your lender will require an appraisal on the property so they know the value is there. It protects you and them. And they know they're not lending a million bucks on a home that's worth $900,000. So the appraisal will typically cost around $400-600. And the appraisal fee and the inspection fees are typically paid "upfront", so these are at the beginning of the transaction, whereas the rest of the costs I'm going to go over will be paid "at closing".
That leads us to cost #3... which are the Lender Fees. These are costs associated with getting a loan and include things like underwriting, processing, and credit reports. These usually add up to somewhere around $1,500-2,000. Your lender will be able to give you a detailed estimate.
#4 are the Escrow fees. Some parts of the country use an Attorney to facilitate the transaction, here in California, we use escrow companies. The main escrow fee is typically based on the purchase price, then there are a bunch of smaller miscellaneous fees like courier fees, notary, etc. All together, escrow fees are usually somewhere between $1,000-3,000, and it can go higher with more expensive homes.
#5 are all the Title fees. The primary cost here is the Lender's Title Insurance Policy, which protects the lender in the case of any title issues. There is also an owner’s title policy that protects you, which here in San Diego, is typically paid by the Seller. And these are also calculated based on the purchase price. Title fees will also include some other smaller miscellaneous fees such as recording and wiring fees, and all together Title fees are usually somewhere around $800-$1,500. It could be even more if you're looking at multi-million dollar homes.
Last but not least... #6 we have Prepaids & Impounds. The important thing to know here is that these aren't really closing COSTS of the transaction, but you will need the funds at closing. What you’re doing is actually prepaying certain items. For the prepaids, you’re pre-paying the portion of your first month’s mortgage interest, mortgage insurance (if you have it), and hoa fees (if you have it) that are owed from the day you close until the end of that first month. You’ll also be prepaying your first year’s homeowners insurance, and also your share of the next property tax bill if it’s coming up. And what impounds are, are they allow you to pay your property taxes and insurance monthly with your mortgage payment, rather than a big lump sum once or twice a year. For many people, that makes it easier for them to manage. So what is happening is you’re basically creating a reserve account and funding 2-9 months of payments from which future home insurance and property taxes will be paid. Again, not a cost of closing, but funds that are needed AT closing to prepay those certain items.
These are hard amounts to estimate because they will vary GREATLY depending on the purchase price, what the loan terms are, if you have impounds or not, and even the day that you close. It can be as little as $1,000 or it can be several thousand dollars. Just to give you an idea, a recent transaction I closed with around $600,000 purchase price had prepays and impounds of around $5,000.
That is the gist of it. There may be some other costs... like loan discount points if you want to buy down the rate, additional inspections, if needed, other costs the seller may negotiate, and different companies charge different fees.
As you can see, there are a lot of variables affecting how much cash is required at closing, so it’s hard to give a straight answer without knowing more about your situation. To give you a general idea, here in San Diego it is usually somewhere around 1-3% of the purchase price that is needed on top of the down payment. If you want a more accurate number on how much you’ll really need to buy a home, contact me for a free, no obligation consultation
And like I mentioned, if you don't have the extra cash for closing costs, there ARE options so you don't have to pay them out of pocket. For more information on that, you can contact me as well.
So hope that helps. Now you are more knowledgeable about what it takes to purchase a home. If this helped you out, I ask that you help me out by hitting the like button and sharing this video. Be sure to subscribe to my channel and comment below to let me know what you thought or if you have any questions.
To search all homes that are for sale in San Diego and check out my other blog posts, you can go to SoldByEmil.com
And if you know anyone looking to buy a home in the San Diego area, let me know and I'd love to help them out.
Until next time, this is Emil Ayoub, helping you make moves with confidence.
