Oct 22 2008
Buying a home in San Mateo? Bring some extra cash for closing…
In San Mateo County, it is “customary” for the buyers in a real estate transaction to pay for closing costs. (Note the word customary – like anything else in a transaction, this is indeed negotiable.) But with a normal transaction, the majority of the fees that you’ll see when you close escrow are:
- Escrow fees
- Title insurance, and
- Loan origination fees.
Assuming that you’re not pre-paying points on your loan, you can count on closing costs to amount to about 0.8% of the purchase price. So if you’re buying a $1M home, you should have an additional ~$8,000 set aside to close escrow. Again, this is a rough approximation, but it gives you an idea on the costs involved — first-time buyers are sometimes caught be surprised by this and have to scramble to close escrow.
Well, if you’re buying a home in the City of San Mateo, you need to be aware of an additional transfer tax that increases the 0.8% significantly. The City of San Mateo levies a “City Transfer Tax” of $5.00 per every $1,000 of the sales price. So the same $1M home would be levied an additional $5,000 of taxes at closing. The good news? Unless it’s agreed to otherwise, the buyer and the seller split the City Transfer Tax 50/50. Regardless, $2,500 represents an increase of about 31% above our example $8,000 closing cost.
So while you’re scraping up enough change to buy that first home, be sure to keep an extra stash on the side to cover your closing costs.
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