Closing Costs are the different fees that both the buyer and seller pay upon completing their real estate transaction. Whether you’re planning to buy a home or are putting a property up for sale, it’s essential to include Closing Costs in your overall budget.
Closing Costs can vary depending on where you’re purchasing your home or what type of property you’re buying. You’ll want to do your research or consult with a realtor that you can trust to provide you with guidance on the various nuances involved when finalizing a real estate deal.
Working with multiple clients through the years, I’ve created this blog post to help guide you on the basic facts about Closing Costs and what options you have available with them. Should you have additional real estate-related questions, please feel free to reach out to me. I’ll be glad to help you with your inquiries and represent you in any future deals you would like to do in our area.
Closing Costs in Carlsbad, CA
There are several Closing Costs buyers and sellers will have to pay upon completing a real estate deal. The amount varies for each deal, but in general, Closing Costs are around 11% of the sale price.
Traditionally each of these charges is paid by a specific party and you’ll want to consult with your realtor about which ones of them you’ll have to include in your budget.
Title Fees are Closing Costs involved with services you need to verify ownership of the property in question and insurance that protects you from any issues resulting from the title.
- Lender’s Title Insurance
- Owner’s Title Insurance
- Escrow and Settlement Fees
- Recording Fees
- Taxes and Stamps
If you’re selling a home, you’ll want to get documentation from Title Companies proving you’re the owner of the house. This will help expedite the transaction if you have this on hand as you list your property.
For buyers, if you plan to mortgage the home, you’ll cover the Title Insurance for your Lender as well as any fees to survey the property and verify ownership. You’ll want to have your representative ascertain the title of the home to help protect you from fraud or other problems resulting from the house’s title.
An escrow company is a 3rd-party that oversees the real estate transaction for both the buyer and the seller. They hold onto funds and verify all documents are accounted for before finalizing your deal. Examples of escrow fees include:
- Daily ‘Per Diem’ Interest Charges
- Real Estate Tax Escrow
- Insurance Escrow
For buyers, they hold onto your deposit and only release payment to the seller once all the requirements for your transaction are completed. For sellers, they ensure the ownership of the property is not done until funds are available to complete the transaction.
Closing Costs for Buyers in Carlsbad, CA
If you’re going to finance your home purchase, there are various fees you’ll cover with your mortgage company. You’ll want to have a thorough talk with your Lender on each expense included in your estimate to ensure you’re only paying for what you need. Typical costs from lending companies include:
- Mortgage Insurance
- Advanced Property Tax Payments
- Application Fee
- Credit Report Fee
For an estimate on your closing costs you can try this Mortgage Calculator from Bank of America.
Home Appraisal Closing Costs are the various services a buyer typically pays to confirm the home’s value. You’ll want to make sure you cover all your bases when you do your inspections to help avoid any surprise repair costs on the property down the line. Typical inspections you’ll want to do on a home you are buying are:
- General Home Inspection
- Property Survey
- Termite Inspection
- Flooding Inspection
- Sewage, Electricity, Plumbing, and Other Utilities
Depending on the type of property you’re buying, there may be specialty inspections you have to perform. You’ll want to inquire with your realtor about which inspections you need for a home to help protect you and your investment.
Closing Costs for Sellers in Carlsbad, CA
The seller usually pays for the commission for the realtor for both parties. Typical rates in California for agent commissions are:
- Listing Agent: 3% of the sale price.
- Buyer’s Agent: 2.5% – 3% of the sale price.
If you’re planning to sell a property you’ll want to make sure all bills on the home are up to date on the property. These usually include:
- HOA Fees
- Insurance Fees
- Mortgage Payments
If you’re looking to use the funds from the sale of the home, you’ll want to be transparent with the buyer during the negotiation. Ask your realtor what options you have in this regard.
Five Ways to Save on Closing Costs in Carlsbad, California
If you’ve read through the various examples of Closing Costs in Carlsbad, California, you’re probably wondering how you can save on them? We’ve got you covered with five steps you can follow to save on Closing Costs.
- Negotiate For Discounts. One of the easiest and most effective ways to save on your Closing Costs is by asking for discounts. You’ll be working with multiple companies throughout your real estate transaction, and you’ll want to ask if they can offer good deals for your purchase.
- Ask Buyer/Seller to Cover Closing Costs. If you’ve got good leverage on the deal, you have a reasonable chance of having the other party pay for part or all of your Closing Costs. For example, if you have a buyer that’s eager to purchase the property, they may be willing to pay for your part on the Closing Costs to help ensure they close on the property. Similarly, if you’re looking to buy a home in a buyer’s market or have been listed for a long time, you may have a good chance of having them pay for your Closing Costs to get the property off their hands.
- Find a Good Lender. If you’re looking to get a mortgage for your home purchase, you need to make sure you visit several lending companies. Getting multiple offers will exponentially increase your chances of getting a good deal for your mortgage. Ask for a GFE (Good Faith Estimate) during your visit to a lender. This is a form that itemizes all charges involved in your mortgage and can help you identify any fees you may take off your deal.
- Pay More Upfront. If you have the funds available, you can increase your upfront payment and typically get a good discount on the overall interest you have to pay for your home. This is also a great way to get good deals from lenders, especially if you’re paying more than 20% for the downpayment.
- Close on the 30th. Another easy way to get a discount on your Closing Costs is by closing your deal at the end of the month. You have a daily interest charge for your mortgage, and if you close on the 30th or 31st, you can cut this payment down to just one or two days.