San Diego Home Buying: Your Guide to Closing Costs

We know from personal experience how easy it is to get caught up in the excitement of purchasing a home and overlook some of the less glamorous aspects of the process.

While most buyers know they must produce a substantial downpayment if they take the conventional loan route, many are caught off guard by closing costs. These fees can add up, leaving you scrambling if you’re unprepared.

That’s where we come in. We want to ensure you walk into the closing day with confidence and peace of mind. Here’s everything you need to know about closing costs when buying a home in San Diego.

Closing Costs: What Are They?

Closing costs are expenses buyers and sellers pay when finalizing a purchase. As you may have already gathered, these expenses are separate from the down payment and are due on the day you close.

If you’re a buyer who wants to get a jump-start on calculating closing costs, they are typically between 2% and 3% of the home’s purchase price. This number can range from 5% to 8% of the sale price for sellers. This number may vary depending on the lender, location, property taxes, etc. If you want to nail down a more accurate estimate, our agents will work with you to ensure there are not any surprises.

Who Pays Closing Costs?

In San Diego, both buyers and sellers pay closing costs. Buyers generally pay for items related to their loan: origination fees, appraisal fees, etc. On the other hand, sellers typically cover real estate commissions and transfer taxes.

That said, every real estate transaction is unique. In some cases, buyers and sellers may negotiate to share closing costs or negotiate a deal where one party agrees to cover specific expenses in exchange for concessions.

The Specifics: What’s Included in Closing Costs

Lender’s Title Insurance: Lenders require buyers to purchase title insurance, which protects them against any title defects or disputes arising over questions about ownership.

Escrow Fees: When buyers and sellers enter into an agreement, they often use an escrow company (a neutral third party) to facilitate the transaction by holding funds and essential documents. The fee may vary but is based on the home’s purchase price—typically $2 per $1,000 + a $250 base fee.

Property Taxes: Buyers will also be expected to pay prorated property taxes from the closing date to the end of the tax period.

Homeowner’s Insurance: Lenders will want proof that you have a homeowner’s insurance policy. Premiums vary depending on the insurance company.

HOA Fees: If your new home is part of a homeowners association, you must pay prorated HOA fees. These fees vary with the type of community, location, and amenities.

Lender Origination Fees: Lenders typically charge these fees to cover the cost of verifying your financial information and processing your application.

Appraisals: Appraisals tell lenders the market value of a property to ensure it is proportionate to the amount of money they are extending to you.

Home Inspections: Inspections can reveal underlying problems with the property, giving you more negotiating power and peace of mind. It’s worth noting that these fees are generally paid before closing—directly to the inspector at the time of service.

Your Real Estate Goals Are Our Priority!

Whether you have questions about closing costs or are looking for strategies to reduce them,The Selby Team can help. Whether you are a seasoned investor or a first-time buyer, our agents will guide you through the San Diego real estate market and make your home buying journey as smooth as possible. Contact us today to learn more about how we can help you achieve your homeownership goals!