What Are Closing Costs?
Closing costs are the fees and expenses you pay to finalize your home purchase — beyond the down payment. In California, buyers can expect to pay between 2-5% of the purchase price in closing costs.
Typical Buyer Closing Costs
On a $700,000 home, expect approximately $14,000 - $35,000 in closing costs.
Here's the breakdown:
| Cost | Typical Range | |------|--------------| | Loan origination fee | 0.5 - 1% of loan | | Appraisal fee | $400 - $700 | | Home inspection | $300 - $500 | | Title insurance | $1,000 - $2,500 | | Escrow fees | $1,500 - $3,000 | | Recording fees | $75 - $200 | | Prepaid taxes & insurance | Varies |
Ways to Reduce Closing Costs
- **Negotiate seller credits** — Ask the seller to cover a portion
- **Shop around for lenders** — Rates and fees vary significantly
- **Ask about lender credits** — Trade a slightly higher rate for lower upfront costs
- **Close at end of month** — Reduces prepaid interest charges
California-Specific Considerations
- **Transfer tax**: Typically paid by the seller in Southern California
- **Natural hazard disclosure**: Required and may have associated fees
- **HOA fees**: If applicable, expect prorated dues at closing
Don't Let Closing Costs Surprise You
Understanding these costs upfront helps you budget accurately and avoid last-minute surprises. I walk every buyer through the numbers so there are never any hidden fees.