So, what are Closing Costs? Closing Costs are the many fees that both home buyers and sellers pay upon the latter part of a real estate transaction. These costs vary depending on several factors of your particular deal, but it’s important to have a clear picture on the Closing Costs that you’ll have to cover during your home purchase or sale.
In our Closing Costs blog posts, we detail out the many Closing Costs you can expect to pay upon completing a real estate deal and which party usually pays for them. Should you have additional questions not answered in our guide, please feel free to reach out to us and ask them. We’ll be glad to guide you on the various nuances involved you in your transaction and represent you in your deal should you need the help of a local realtor.
Closing Costs in Pasadena, California
Closing Costs in Pasadena, California, are typically spread between homebuyers and sellers. Although some of them are paid by both parties, most have been traditionally covered by either the buyer or seller.
During the negotiation stage of your real estate deal, you’ll want to discuss these costs with your realtor. In some instances, you may be able to have the other party cover your part of the Closing Costs if you have enough leverage on your deal.
Sellers Closing Costs
An escrow company serves as a third-party protecting both parties involved in a real estate transaction. They hold on to the deposit payment of the buyer and ensure all required documentation is submitted before moving forward with the deal. Once they’ve confirmed that both parties have submitted their paperwork and other commitments, they can release funds to the seller and transfer ownership to the buyer.
The typical Escrow Fee in California has a flat fee of $250 plus an additional $2 for each $1,000 on the property price. If you’re selling a home worth $200,000, you can expect to pay around $400 + $250 in Escrow Fees.
Realtors representing both the buyer and seller take a commission of the total contract price of a real estate deal. In California, it’s typically the seller that pays for the commission of both realtors.
The rate of your commission varies depending on your arrangement with your realtor as well as the real estate company you’re working with for your deal. The average rate in Pasadena is anywhere between 4.95% to 6% of the property’s value.
If you’re looking to work with a real estate agent for your home purchase or sale, please do consider our services for your deal.
A title company provides sellers with the necessary certification to prove ownership of the property. They also help identify if there are any competing claims or liens that may cause future problems if the property is sold.
Utility and HOA Bills
Before selling a home, you’ll want to make sure you pay off any outstanding bills on the property. If you’re selling distressed property and are planning on using funds from the sale to pay off your bills, you’ll want to coordinate this with the buyer. Being upfront with potential buyers is an excellent way to build trust.
Buyers Closing Costs
If you’re planning to finance your home purchase, Mortgage Costs will be the most considerable Closing Costs a buyer can expect to pay outside your deposit. Your Lending Fees will include all costs involved with applying and processing your home loan.
Home Appraisal and Insurance
A home appraisal is done to determine the actual market value of a property. If you’re getting a home loan, your lending company will probably require a home appraisal. Typical appraisal fees range between $350 to $600. Your lender will also probably require you to get a Title Insurance to help protect you from any possible issues resulting from the home’s title.
Home Inspection Fees
If you’re buying a property, you need to make sure to do the necessary due diligence to identify the current quality of a home. Home Inspections involve determining the current standing of a house’s physical status. Typical inspections include checking the foundation, sewage line, roof, mold, termite, pest, and structural.
There are several certified home inspection companies in Pasadena, California. Typical fees from these different companies can range between $250 to $600 per inspection.
Homebuyers also pay part of the Escrow Fees. Typically, a buyer locks in their deposit payment with the escrow company to provide proof of funds for their purchase. Their deposit is not released to the seller until all requirements are finalized, and both parties have confirmed that they are moving forward with the deal.
If you’re buying a home, you’ll also want to hire your own Title Company. Hiring your own Title Company will let you confirm that the seller is the actual owner of the home and identify any potential problems, including fraud, outstanding loan fees, liens, counterclaims, and more.
Saving on Closing Costs in Pasadena, California
Whether you’re buying or selling a home, figuring out ways to save on Closing Costs is an excellent step at reducing your overall expenses for your deal. We provide the five most common ways you can save on Closing Costs that you can try out for your home purchase or sale.
If you’re getting a mortgage for your home purchase, closing your deal at the end of the month is a great way to save a few hundred dollars. You pay a per diem or day-to-day interest when you have a home loan. However, if you close at the end of the month, you’re effectively paying 0 days for your per diem interest on your first payment, which is a great way to reduce your upfront Closing Costs.
Talk to Multiple Lenders
A great way to get a better deal for your mortgage interest rate is by talking to multiple lending companies. If you have multiple offers on hand, you increase the chances of getting a better deal when going to the next lender across the street.
Request a GFE
A GFE or Good Faith Estimate is an itemized breakdown of your home mortgage. Check each line item you’re paying for before leaving the lending company’s office and figure out if any of the charges can be removed or if you can do some of the service items yourself.
One of the best ways to save on Closing Costs is by having the other party cover your half of the Closing Costs. If your counterpart is looking to close the deal fast, they may be willing to pay your Closing Costs to help expedite the sale. Ask your realtor if this is a possible option for your deal.
Check For Discounts
All service providers involved in your Closing Costs have competitors, and they usually offer discounts to help encourage clients to work with them. When looking for mortgage companies, title companies, home inspectors, attorneys, etc., ask if they offer a promo or discount.