Buying A House? Don’t Forget Closing Costs

If you are buying or selling a house, don’t forget the expenses of closing costs in your budget. Find out what all of them are.

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When discussing a home sale or purchase, we often focus on the sales price, the interest rate of the loan, down payment amount, etc. — but a detail that many agents don’t bring to their clients’ attention early enough are the closing costs that they’ll have to pay at the close of escrow.

Today’s video is to educate buyers and sellers about three of the common items you will see on your closing statements and some tips and strategies for lowering those costs if possible.

Local Government Transfer Taxes. Known as county and city transfer taxes, these taxes are what the local government charges you when you sell a house. In most Bay Area counties, this is $1.10 for each $1,000 of value.

For a $1,000,000 home, you would pay roughly $1,100 in transfer tax.

The city and county of San Francisco have the highest transfer taxes in our area—$5 per $1,000 of value for any sale under $250,000, and going up progressively from there.

The seller is usually the one who pays the county transfer tax in the Bay Area while other cities in the county have additional city transfer taxes which are split between buyer and seller.

For example, the City of San Mateo has a transfer tax of $5 per $1,000 of value in addition to the county fair tax.

Title and escrow charges. In most Bay Area counties, the buyer pays these charges. These charges include the owner’s title insurance policy, which is around $2,000, the lender’s policy, which is another $1,000, and an escrow fee, which is $2,000.

To learn more about these, please watch my other video about title and escrow here.

Loan Charges. When buying a house many lenders charge a loan origination fee. This is often negotiable, and some banks will offer you a credit towards your closing costs. Usually you will also have to pay an appraisal fee, which is around $500. Some lenders can also add additional fees, which you should pay attention to on your closing statement, that are negotiable.

As a seller, you’ll have to pay off your principal balance owed to the bank and prorated interest for the month. In addition to this, you’ll have to pay other miscellaneous fees of a few hundred dollars that some banks charge.

If you have any more questions or you’d like to learn more, you can visit my YouTube channel and watch other videos that I’ve made. You can also visit my website or contact me directly. I look forward to speaking with you soon.