CLOSING COSTS WHEN BUYING A HOME IN SILICON VALLEY

 

Buying a home is not just about the purchase price. Closing costs are additional fees that buyers are required to pay in conjunction with any home sale. Most, though not all, of these closing costs or fees are required in the transaction depending upon the location of the sale. Most closing costs or fees for a purchase are around 1% of the purchase price of the home. 

For a $1M home, as an example, closing costs could be around $10,000. Customary practices here in Santa Clara and Mateo Counties tell us which fees are expected to be paid by the Buyer and which by the Seller depending on the location of the sale.  

Here is a list of fees that may be included in Closing Costs for a home purchase:

  • Underwriting or Origination fee: Costs involved by the lender to process the potential buyer’s qualifications for a loan.Costs for obtaining credit checks on the buyer and an appraisal of the home to confirm the fair market value of the home may also be included here. It usually amounts to 1% of the total loan;this fee can be negotiated with the lender and not all lenders charge this fee
  • Appraisal fee: Paid to appraiser to determine fair market value of the home
  • Home inspection fee: Certified home inspector verifies the condition of the property, roof and home repairs prior to closing. Here these are typically done and paid for by Seller ahead of going on the market, however
  • Pest inspection fee: Certified pest inspector checks for termites, dry rot, etc. These are also typically paid for by Seller ahead of going on the market
  • Title and Escrow fee: Paid to an independent title or escrow company to ensure all documents are in order and filed with the city and county of purchase or sale
  • Credit report fee: 2 or 3 credit agencies pull buyer’s credit history and/or score as one criterion of credit-worthiness for a loan. Credit history/score has big impact on loan interest rates and lender will pull this ahead of getting a pre-approval letter
  • Homeowner’s insurance: Covers possible damage to the house. First year amount is often paid at closing
  • Prepaid interest: Amount that accrues between closing and date of first mortgage payment
  • Private mortgage insurance (PMI): If down payment is less than 20% of purchase price, the Buyer is required to pay PMI.The first month’s PMI is usually paid at closing
  • Loan discount points: “Points” are prepaid interest that can lower monthly mortgage payment for the life of the loan. One point equals 1% of the loan amount
  • Recording fee: Charged by city and/or county for recording of deed
  • Transfer fee: Tax paid when title of home passes from Seller to Buyer
  • Property tax fee: Typically, lender wants any taxes due within 60 days of the purchase by the lender to be paid at the closing
  • Additional fees and documents:
    • Homeowner’s Association Fees
    • Courier services
    • Notary services

Below is a chart that indicates which closing costs are customary for the Buyer or Seller to pay in San Mateo and Santa Clara Counties:

COUNTY ESCROW CHARGES / FEES TITLE FEE
(Owner's Policy)
COUNTY TRANSFER TAX
(tax per thousand)
CITY TRANSFER TAX
(tax per thousand)
SAN MATEO Buyer Pays Buyer Pays Seller Pays: $1.10 Split - Buyer/Seller:
San Mateo: $5.00
SANTA CLARA Seller Pays Seller Pays Seller Pays: $1.10 Split - Buyer/Seller:
Palo Alto: $3.30
San Jose: $3.30
Mountain View: $3.30