Before you start searching for a home, speak with a lender to see how much you can comfortably afford. Once you have locked in your price range, make sure to ask your lender what his/her fees are for obtaining the loan, then ask your Realtor what other costs you should expect when purchasing. Here are 8 costs when purchasing a home in Southern California. These are also known as closing costs.
1: Earnest Money (Deposit)
Shows the owner, you are fully committed to purchasing the home. The typical amount is 3% of the purchase price, but that varies depending on many factors such as the market condition and how much you love the property.
The most common question we receive from buyers: “Is this refundable if something unforeseeable is found during the inspection period?
The simple answer is yes, but only if you have not removed your inspection contingency. Please contact your Realtor to go over all the details and timelines.
2. Escrow Account
An escrow account is essentially a bank account that your lender may require if the down payment is less than 20%. The money held is to pay for related taxes and mortgage insurance. The amount is different depending on the lender guidelines and loan type. Keep in mind that the cost can vary significantly depending on when you close escrow.
3. Escrow Fee and Charges
Not to be confused with an escrow account. Escrow is a third party that receives money/documents from one party and disburses it to the other party during a transaction. The escrow fee is typically around $1,300 on properties selling for $600,000. Other charges include Loan Tie-In Fee ($200), Mobile Notary ($175) and a Messenger Fee ($80). Other fees can apply depending on the escrow office.
4. Origination Fee
Origination fees can be pretty costly depending on the lender you work with. This fee is what your loan officer makes for finishing the loan, and factors in underwriting, originating, and processing costs. The wise thing to do before searching for a home would be to shop for a lender.
It is important to understand the property condition before you purchase. The last thing any buyers want is to be surprised the home has issues that exceed their budget. A good home inspector will notify you of electrical problems, active and old leaks, plumbing and many other serious problems.
Home inspections can cost an average $450 for your standard four-bedroom home in Encinitas but can reach as high as $1,200 for larger properties in Rancho Santa Fe.
Roof inspector:You might consider this inspection depending on the age of the roof and the home inspection report. It’s better to know the cost of repairs or replacement than not knowing at all. This can cost between $100 to $250.
Termite inspection: Do not worry about this cost. Any offer we write has the seller paying for the report.
Other inspections may come into factor depending on where your property is located. ie: survey, soil engineer.
6. Credit Check
Your lender will pull from all three agencies. The cost is usually around $30.
7. Added Insurance
Just because we live in San Diego, doesn’t mean we do not have any hazards. Be prepared that your lender will require fire or flood insurance before close of escrow. Shop around for the best prices.
The home has to get appraised at fair market value in order for you to receive a loan. The cost is $400 to $700 depending on size.