Closing Costs Explained for California Home Buyers

Every buyer I work with asks the same question at some point: "What am I actually paying at closing?" The answer surprises people, so let me break it down in plain language for buyers in Riverside County.

The Rough Number

Plan on closing costs running between two and four percent of the purchase price. On a 650,000 dollar home in Murrieta, that is roughly 13,000 to 26,000 dollars on top of your down payment. Some of that money you get back or apply forward. A lot of it does not.

Lender Fees

Your lender charges an origination fee, an underwriting fee, and sometimes a processing fee. Together these usually run half a percent to one full percent of the loan. Rate lock extensions and discount points, if you buy your rate down, also live in this bucket.

Third Party Fees

The appraisal usually runs 650 to 850 dollars. A full home inspection runs 400 to 600 dollars. Termite, roof, sewer, and pool inspections are extra when you want them. Title insurance and escrow fees are split between buyer and seller by local custom, but you still cover your share.

Prepaid Items

At closing you prepay your homeowners insurance for the first year, several months of property taxes into an escrow impound, and any prorated interest between closing day and your first mortgage payment. This is where a lot of buyers get caught off guard.

Recording and Transfer

The county recorder charges a small fee to record your new deed. In California the documentary transfer tax is normally paid by the seller, but read your contract.

HOA and Mello Roos

If your new home is in an HOA, expect a transfer fee and a capitalization contribution to the reserves. Mello Roos is a separate special tax that shows up on your tax bill, not at closing, but you need to know about it before you write your offer.

How to Lower the Bite

Ask your lender for a Loan Estimate on day one and compare two or three lenders. Shop your title and escrow companies where allowed. In a balanced market you can also negotiate seller credits to cover a portion of your closing costs, especially on homes that have sat for a few weeks.

Get Real Numbers Before You Fall in Love

The worst time to see your closing cost worksheet is the week of closing. Ask for a detailed estimate before you write your first offer. If you want a walk through of what to expect on a specific price range in Temecula, Murrieta, Menifee, or Lake Elsinore, reach out.

Call or text 951 259 1187 anytime.

Tags: closing costs, California home buying, Temecula real estate, first time buyer, BRIX Realty, Jarred Hanson