Costs To Buy A Home

You've researched neighborhoods, looked at homes, attained a proper pre-approval from a lender, and are now ready to make offers.

Many home buyers take these steps without going over the details of closing costs.

Or perhaps they have a rough estimate of what they are and don't bother to dig deep. This is a huge part of the process and needs to be addressed before making an offer.

As fast as the current market is moving, you want to make sure you have the right liquidity of cash when it comes due.

Here is a list of many potential closing costs:

Escrow Fee

Title Fee

Loan Origination Fee

Down Payment

Appraisal

Inspections

Pre-paid Taxes

Recording Fee

Escrow Fees

In most transactions here in San Diego, the escrow fees are split between buyer and seller. They will end up paying their own fees.

This will vary depending on the cost of the home. The more expensive the home, the higher the escrow fees.

However, it does not change as a percentage of the price.

For example, a home priced at $500,000, might have an escrow fee of around $2,400 ($1,200 to each both the buyer and seller).

With a home priced double the amount at $1,000,000, the escrow fee would be around $3,000. (Only $300 more to both buyer and seller).

Title Fees

Often referred to as the Title Insurance on the home. Surprisingly, this often gets passed on to the seller.

In the current competitive market, we have seen some offers showing the buyer taking on the cost as an added incentive to the seller. However, most often this is a seller fee. 

If we were to look at the homeowner's TItle Insurance cost for a $1,000,000, it would be around $2,500. 

Loan Fees

The loan origination fee will typically be the largest cost to you as the buyer other than your down payment. Most lenders charge a fee of 1% of the purchase price. This can sometimes be rolled into the loan, especially on VA loans. 

Your down payment will be anywhere from 0-20% (normally) of the purchase price of the home. This is the most important part of saving up to buy a house. Here are the down payments and the loans they belong to.

0% - VA Loan

3% FHA Loan

5-20% Conventional Loan

Then, of course, you have some buyers who want to put as much as 50% down and take a loan on the remaining balance. 

Appraisal Fee

An appraisal is done by a 3rd party company to ensure the home is at or near the actually agreed-upon price. It is ordered by your lender and will usually cost around $600.

The lender needs this because 1) they have not seen the home, and 2) they are lending the majority of the money for the property and want to cover their a$$.

Once the price is confirmed the lender will feel comfortable moving forward with the contract price that was set by the buyer and seller.

Inspection Fee

The cost of doing inspections can go up or down depending on the condition of the home and/or how many features it may have.

For instance, a buyer may only order a general home inspection at the beginning of the inspection period to get a feel for the home.

The general home inspection might then show that the roof is at the end of its life and is showing possible signs of previous leaks.

As the buyer, you will then want to hire a roofing company to do a separate and more in-depth report on the roof. 

If you are buying a house with an elevator and a pool, you likely want to order those reports along with your general home inspection as they will typically not be covered in the general home inspection.

Home inspection costs go up as the size of the home does. Time is money. For a detached home that is around 2,000sqft, a home inspection is around $500/600.

Other inspections you might need to get are:

Termite Inspection $80

Roof Inspection $300

Sewer Scope $300

Pool Inspection $200

Pre-Paid Taxes

County and state taxes will vary of course. In San Diego, we have a total property tax of around 0.76% of the assessed value. This may seem high as our home prices can be some of the highest in the country and as the buyer, the assessed value resets to the purchase price when you buy the home. However, based on solely the percentage, it actually fits right in the middle for US state property taxes. Hawaii has the lowest taxes at 0.28% while New Jersey is the highest at 2.49%

Recording Fee

Congratulations! If you're paying this fee then it means you've just closed on your new home. In San Diego, the recording fee is roughly $150.

If you or someone you know is looking to buy or sell here in San Diego, feel free to reach out to us, we would love to be your real estate resource!