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Our company is based in Contra Costa County, California — Walnut Creek, to be precise. So, from time to time, we like to share real estate and mortgage-related information geared toward local home buyers within the county.
Today, we’ll be addressing a common question among buyers: Who pays which closing costs in Contra Costa County?
How Closing Costs Work in Contra Costa County
When you buy a home, you’ll have to pay certain costs on the day you close or “settle” the transaction. These are aptly referred to as closing costs. That’s a collective term for all of the fees, charges and taxes that buyers and sellers pay when they close the deal.
Some of these costs relate to the mortgage loan, if one is being used. For example, there are mortgage processing fees, underwriting fees and — in come cases — discount points paid by the buyer. There are also “non-lender” closing costs, like title and escrow fees.
Contra Costa County home buyers tend to have more closing costs than sellers do. That’s because the buyer is the one taking ownership of the property, so most of the services are performed on their behalf.
But sellers do have their own closing-related costs to pay, and we’ll cover those in a moment.
Who Pays What, Between the Buyer and Seller?
In Contra Costa County, it’s customary for buyers and sellers to pay their own individual closing costs. But this can also be negotiated as part of the real estate deal.
For instance, in some cases the seller might agree to pay for a portion of the buyer’s closing costs as an added enticement. This strategy is more common in a slower housing market, where sellers have to go above and beyond to attract buyers. In a more active market, sellers are generally less likely pay the buyer’s closing costs.
As mentioned earlier, both the buyer and seller have their own individual costs they’re responsible for paying on closing day. In Contra Costa County, it works like this:
- Mortgage-related fees: These costs are usually paid by the home buyers, since it’s their mortgage loan. The buyer typically pays for these loan-related charges on the day they close, via cashier’s check or wire transfer.
- Escrow charges: Home buyers in Contra Costa County typically pay their escrow-related fees as part of closing costs. These fee are paid to the title or escrow company that handles the closing, to cover paperwork, processing, and the exchange of funds.
- Title fees: This is another common closing cost in Contra Costa County, and it’s usually the home buyer who covers it. These fees pay for specialized insurance policies that can protect the lender and the buyer from title-related claims against the property.
- County transfer tax: This is a standard tax charged by Contra Costa County when a person sells a home to someone else. It’s basically a tax on the transfer of property, hence the name. The seller usually pays for the county transfer tax. The base transfer tax in Contra Costa and other California counties is $1.10 for every $1,000 of the home’s value. (Example: On a $500,000 home, the transfer tax would be 500 x 1.10 for a total of $550.)
- City transfer tax: In addition to the county tax, the buyer and seller might also have to pay for a real estate transfer tax assigned by the city. In Contra Costa County, it’s customary for the buyer and seller to split the city transfer tax in most cases. Some cities in California don’t even charge a transfer tax. It varies quite a bit.
As you can see, some closing costs in Contra Costa County are paid by the home buyer, while others are paid by the seller. And some can be split between the two parties.
Standard Documents and Disclosures
Home buyers who use mortgage loans to finance their purchases will receive an estimate of their closing costs up front. They also receive a finalized “Closing Disclosure” a few days before closing. This disclosure shows the actual amount you’ll have to pay when you close.
So, as a home buyer, you shouldn’t encounter any surprises on closing day. The best thing to do is stay in touch with your loan officer and escrow company point-of-contact, to make sure everything is on track.
In Contra Costa County, the closing process for home buyers and sellers usually runs smoothly. But on occasion, issues might arise with the paperwork, fees, or something else related to the closing. These obstacles can typically be resolved in a timely fashion, to avoid unwanted delays.
It’s important to remember that everyone is working toward the same goal, which is the successful sale and transfer of the property. And with proper planning and good communication, that goal can be achieved in almost all home-buying scenarios.
Have mortgage questions? Bridgepoint Funding has been serving the mortgage needs of home buyers and homeowners in Contra Costa County for nearly 20 years. Please contact us if you have any mortgage-related questions, or if you’d like to receive a loan estimate.