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In California, closing costs are well above the national average. Expect to cough up between 0.93% and 1.09% of your total home purchase price — though the seller may be willing to sweeten the deal with a concession.
In California, the average home sells for $600,000 to $700,000. If you find a property within that price range, expect to pay between $6,300 and $7,350 — before taxes — in closing costs. These charges cover your inspection, appraisal and origination costs, as well as title insurance and courier fees.
Depending on the type of property and how you’re paying for it, you may also need to pony up for mortgage insurance, flood certification, HOA or condo fees. Some of these are negotiable, but the taxes are set in stone. California is subject to property and transfer taxes, though property taxes have been capped at 1% of the purchase price since 1978.
Our averages are based on sample data. Closing costs can vary based on your lender, the size and type of your loan and even your credit score.
California’s closing costs are the sixth highest in the country, lagging only behind DC, New York, Maryland, Delaware and Pennsylvania.
This rank is not surprising, given the expensive real estate and the fact that houses and land lots make up the majority of the market.
Closing costs are split between the buyer and the seller in the Golden State, though the buyer absorbs most of them. Your rates reflect your lender and the market, as well as the type, location and price of the property.
In California, you can pay interest up front at closing in the form of discount points. Many buyers opt into points to score a lower interest rate on their mortgage.
One point equals 1% of the loan amount. So, for a $250,000 loan, you’d pay an $2,500 in points at closing.
The Golden State stands out for its unique settlement process. When you buy or sell a property in California, you’ll need to keep a few rules and guidelines in mind.
You might not ever meet the other party face to face. Buyers and sellers often leave the communication up to their real estate brokers and agents, who ask questions and negotiate on their clients’ behalf.
Once the terms of the sale and escrow are finalized, you get the keys to your new home.
Your broker can be what’s called a dual agent, or — in the case of two agents working for the same broker — a dual-agency partnership.
If you agree, the buyer and seller must consent to the arrangement in writing. You’ll complete a Disclosure Regarding Real Estate Agency Relationships form, which identifies the brokers and agents involved in the real estate transaction.
Under the Community Facilities Act, Mello-Roos taxes are used to fund improvements to local infrastructure. They can be used to build or repair streets, sewers and sanitation systems, pay for police protection and cover the maintenance of parks, schools and other facilities.
Before buying a home, ask whether the property is located in a Mello-Roos Community Facilities District. If it is, ask about the expected special-tax payment due each year, and factor it into your budget.
California is prone to earthquakes. If you have a mortgage, you must buy homeowners insurance — but your policy won’t cover earthquake damage, except in the case of fire. Those policies are sold separately, and they’re optional.
When you buy homeowners insurance, the company must offer to sell you earthquake insurance. The written offer must lay out the limits, deductible and premiums you’d pay. And you have 30 days to accept the offer.
California’s closing costs are among the highest in the country: Expect to pay 0.93% to 1.09% of the sales price. There’s room to negotiate some fees, while others are fixed.
With closing costs so high, it’s worth it to compare mortgage lenders to find the most affordable for your needs.
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