You have recently started the house-hunting process in California and are thoroughly enjoying navigating this new chapter in your life. After all, it is something that everyone wants the chance to experience at some point in their life. But before being able to move all your possessions into the house of your dreams, you may need to learn more about closing costs.
Closing costs in California, more specifically Central Valley, differ from those of different states across the country. But, with the help of somewhere like https://centralvalleyrealestatepros.com/central-valley-closing-costs/, as well as this informative article below, you have the chance to learn everything you need to know about closing costs before making this huge step in your life.
So, let’s get started.
What are Closing Costs?
Before we can dive further into the world of real estate, and closing costs, in particular, we first need to understand what they are and how they make up the home buying process. Put simply, they are fees and expenses that get paid by the buyer and seller when a transaction has been completed. Some people don’t realise how important they are, but they are considered to be the most common expenses in real estate transactions.
Closing costs only come into play toward the end of the transaction. This is because they are the costs that are associated outside of just the down payment amount. Depending on whether you are buying or selling a property in the Central Valley area of California, you will only need to pay close attention to the areas that apply to you. Luckily, you can see what they are below.
Closing Costs for Buyers
If you are looking to purchase a property in California, it could be important to note that buyers should be expected to pay 1-3% in closing costs on a house purchase. However, this is just an estimate. Not only does this involve the loan origination fee that gets paid to the lender for preparing the loan, but it also includes the appraisal fee and application fee too. The appraisal fee is paid to the appraiser who determines the value of the property before it gets put on the market, and the application fee is paid to the lender or the broker to check credit, as well as processing the initial loan application.
That being said, you can also look into an inspection fee. This is not part of the overall closing costs as it is an optional service that is provided by a professional home inspector. Ultimately, a home inspection can determine if the property is in good condition before the sale. Don’t forget that Central Valley homeowners should also have the money needed for a down payment on the mortgage, as well as insurance and property taxes.
The Seller’s Closing Costs
Whilst buyers in California should only expect to pay 1-3% in closing costs, this is not the same for sellers, as they could be obliged to pay 5-9% in these types of costs before the sale of a property can be carried out. The factors that are involved in this area are completely different from those that buyers are expected to pay. For example, the broker’s commission is the largest expense that comes with selling a home. This is because there are commissions that are paid to the realtor or real estate broker, and these can be estimated to be around 6% of the sales prices. Depending on the type of situation you find yourself in when selling your home, this could be different, but you should use this information as a starting point.
In some circumstances, you may also have an attorney fee. This does what it says on the tin, as this is what you will be expected to pay to your attorney (if you have one) who is representing you as the seller at the time of closing. Of course, you will also have other closing costs and negotiated fees that make up the total amount of closing costs you could be expected to pay.
This can be a lot of information to take in at once. But you have to remember that you don’t have to navigate this process alone. Within the California real estate market, many professionals will be able to help guide you through the idea of closing costs, allowing you as the buyer or seller to complete your transaction as smoothly as possible.