Hidden Costs of Buying a San Diego Home

If you’re a first-time San Diego home buyer, you may think the only cost of buying a San Diego home is the purchase price. But there are multiple additional costs that need to be considered, and some of them can be a bit confusing.

Having full knowledge of what these charges are can be helpful when buying a San Diego home. Here are ten common additional costs of buying a San Diego home.

Earnest Money

An earnest money deposit is usually 1% to 2% of the purchase price, proving to the seller that you are “earnest” in wanting to purchase the home. Depending on market conditions, this amount can change. A seller may want a larger deposit if demand for houses is high, or can be satisfied with less than 1% if the market is cold.

In any case, this deposit should go towards your down payment and/or closing costs.

Escrow Account

Escrow accounts are required for FHA loans and are frequently seen on loans with less than 20% down payment. Essentially, an escrow account shows the mortgage company that you have enough money to cover the costs of home ownership, such as taxes and mortgage insurance.

The amount needed in an escrow account varies by loan type, lender, and location. It could cover the costs of buying a home for up to a year.

Origination Fee

The origination fee is the fee charged by the loan officer or broker to complete the loan. This fee is negotiable, but typically runs about 1% of the total loan. Shopping around can make a big difference here because the origination fee is money you don’t get back.

Inspections

Inspections are crucial to ensure you are getting a San Diego home that is safe and structurally sound. Unfortunately, inspections can be expensive. Rates typically run between $300 – $500 for a home inspection which will alert you to any structural issues or other serious issues that can’t be seen by the untrained eye. Additionally, a termite inspection will cost approximately $150. A radon inspection is also recommended by the EPA and can cost several hundred dollars.

Attorney

If you choose to use a lawyer, you will have to pay for the expense. Shop around to make sure you are getting the best price if you need to have an attorney present or choose to do so.

Credit Check

Your lender will want to pull your credit from all three bureaus and you will be expected to cover the cost. This is relatively inexpensive, however. You’ll have to reimburse the lender about $30.

Extra Insurance

If the San Diego home you are purchasing is located in a hazardous area, you may be required to buy additional insurance. Some instances of this may be fire or flood insurance.

Appraisal

The appraisal is necessary for the lender to know what the fair market value of the home is. The lender won’t lend money without it, and you are expected to pay for it. Depending on location, a typical appraisal can run from $200 to $400.

Title Company

You’ll pay a fee to a title company to ensure that the San Diego home’s title is free and clear. You can either use the lender’s recommended title company or shop around for one of your own.

Survey

Some lenders may require a professional survey to determine where the property lines are drawn. This cost varies, but at a minimum expect to pay $100.

These hidden costs are not all-inclusive and there may be more or fewer costs required. Be sure to shop around and see what fees are typical for home purchases in the San Diego area. Many rates and fees are negotiable so make sure you have a full understanding of the charges and what they are for. If you are unhappy with a fee or rate, you can choose another service provider for almost any of these costs or negotiate with the original provider.