Understanding Home Closing Costs in Southern California

You are looking to purchase a house in Northeast Los Angeles – NELA as it is commonly known – but you are not sure of the process or how much money you will need. You can get help from a licensed Realtor. However, for a rough idea of the cost, you might be able to conduct some research on your own.

NELA is one of the most popular markets in Los Angeles. There are many neighborhoods to choose from, not just Pasadena and Glendale. But there are also smaller, less-known areas. Fast-selling Garvanza homes are in high demand. Real estate in Hermon has always been in high demand.

Mt. Washington, the housing stock in Highland Park, or the neighborhoods around Eagle Rock might be the ones you are most attracted to, but before you can make any place your home, you need to understand some details.

Many people talk about closing costs in real-estate transactions. However, these can vary due to many factors. The seller pays the commission as a split between the seller’s and buyer’s agents. This is the single largest expense.

There are many fees that the buyer must pay at closing. The following are the most significant:

  • Condominium fees – In some cases, the homeowner association may be behind on dues. If this is the case, you will need to find out before signing the sale contract. These fees can be thousands of dollars in distressed situations (foreclosures or near-foreclosures)
  • Private Mortgage Insurance – You will need to insure your mortgage at 0.3% to 1.15% of its loan amount if your down payment falls below 20%.
  • Origination Fee to the Lender – While you are restoring your dream Victorian in Glassell Park or a fixer-upper home in Hermon, you will need to complete a lot of paperwork with a potential lender in order to prove your creditworthiness. Yes, closing fees are charged.
  • Points These allow you to modify the terms of your loan to your advantage if you pay one to more percentage points towards the mortgage amount. A few points upfront can help you save a lot of money if you have the cash and intend to keep the property for 10 years or more.
  • Prorated tax – The LA tax year starts on July 1st, so you’ll need to pay for any remaining tax in the year prior to the closing.
  • Insurance premiums Protecting your property from damage and liability (as required under all lenders) is also required at closing.
  • Escrow Fees Third parties who perform escrow services must be paid for their work. The state of California does not regulate fee structures. However, they are usually determined based on the size of transactions.

The seller will pay for the reimbursement of multiple fees, but technically these fees are part of the buyer’s closing costs. These fees include the city transfer fee, the documentary transfer tax to the title, and the owner’s title policy. Other fees that are less than $500 include the lender appraisal fee and credit report fee, prorated fees for HOA, courier services related the transaction, notary service, archiving fees (to title), recording trust deed (to Title), and loan tie in fees.

It is often more time-consuming to look at houses, negotiate a price and qualify for a loan than closing the deal. A professional realtor can help you with all details. Invariably, you will be told how much and what form to bring to closing.