Newport Beach is a small city of around 85,000 on the California coast and is an attractive place to buy a home.
However, along with considering location, price and the desirability and value of the home, there’s also the matter of closing costs.
It’s important to know what you’re facing when looking to purchase a home or apartment in Newport Beach.
Key Things to Consider
Buying a home is a massive financial investment, which is why it’s crucial to be informed of all the potential costs before committing.
Here’s a look at the key things to consider.
- Closing costs can be more than you expect.
Closing costs include many aspects that potential buyers sometimes overlook, including lender fees, title fees, appraisal fees, home inspection fees, prepaid fees (like for a Homeowners’ Association or interest that adds up on insurance, etc. between the closing date and the move-in date, mortgage insurance premiums, underwriting fees, and any additional legal or insurance costs.
Buying a home is a big decision, and it’s crucial to be crystal clear on what you’re responsible for in terms of closing costs.
They are generally 1% to 3% of the home’s purchase price and vary widely.
- Keep median prices in mind
The truth is that California closing costs are among the lowest in the United States, averaging 1% compared to the national average of 1.81%.
Californians pay an average of $6,530 in closing costs on a new home bought for $622,800.
That said, Orange County and Newport Beach are a bit on the higher side in terms of housing costs.
In most cases, this means that a more expensive home will have higher costs.
Considering the median home price in Orange County is $792,000 and prices are rising, the costs can certainly add up, coming in at $7,900 to over $23,000 on a median-priced home.
- Getting a handle on escrow
In most cases, the buyer and seller will divide escrow costs down the middle.
However, the state of California requires that the buyer pay all of their own sub-escrow costs.
The sub-escrow is a charge by the title company for handling the loan from lenders and paying off any required liens or encumbrances.
Escrows vary widely in cost but generally range at from around two to three dollars for every thousand of the sales total plus around $250.
Thus a $400,000 home, for example, would have escrow costs between $1,050 to $1,450.
- Credit cards only go so far
It is reasonable to look into the possibility of paying some of the closing costs with a credit card, especially as this could potentially lead to a decent welcome bonus from the card or 0% APR as a starting rate to give you more time and less pressure to pay off closing costs.
Most lenders don’t accept credit cards; however, various closing costs can be paid by credit like the cost of a home inspection and insurance.
It’s crucial to find the right loan for your needs and budget, no matter which area of Newport Beach you choose to buy a home in.
- Don’t be afraid to negotiate
Closing costs are shared between the buyer and the seller, but some buyers don’t realize that they can often be negotiated.
Certain sellers may be willing to give you concessions, and certain lenders also have lower fees than others.
You can negotiate with sellers and lenders to try to eliminate some of the fees, and it doesn’t hurt to ask.
Closing Thoughts on Closing Costs
Closing costs vary widely, but with the above tips in mind, it’s possible to approach home shopping in Newport Beach with more confidence and know-how.
By keeping in mind the above tips, you can approach the issue of closing costs with more knowledge and the ability to maneuver and negotiate to ensure you receive the best deal possible.
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