Q. I was pre-qualified for a 100% purchase to $300k, but, when I tried to buy a home, I needed $15k in closing costs, twice the first estimate. I couldn’t come up with that amount, so I lost the deal. I still don’t understand why it cost so much in closing costs. D.D. Rio Vista
A. Closing costs are a “catch-all” for any fees on top of the purchase price required to make the purchase happen. First, there will be any inspections or repairs billed to escrow during the sales transaction. They become part of the closing costs, and the person responsible to pay is defined in the sales contract. Second, there will be Escrow and Title fees; like the cost to use the escrow service, then, the title insurance fee to guarantee the grant deed is transferable and clear of problems. Third, loan fees, which will be dependant on your credit and the strength of your purchase. Loan fees on your deal would also require Mortgage Insurance (100% financing), the first year paid in advance, with monthly impounds to collect for the following year; usually 3 impound payments in advance. Fourth, impounds for recurring costs like taxes, insurance, PMI, and any bonds on the property.
A good faith estimate is given prior to purchase, but some things can change day to day. For instance, loan rates can fluctuate causing a change in fees and PMI; insurance cost could be higher if flood is required, or the condition of the home is in question.
One solution to your problem is to raise the purchase price enough to cover your closing costs (having the seller refund the additional to cover closing costs), or, find someone to gift you some money. It would certainly be a shame to be so close to a purchase and lose out. Check with your agent for options
Q. I’m looking for land, preferably with waterfront where I can build, but I can’t seem to find a realtor with any listings of this type. Is this something that comes up for sale from time to time or not? E.S. Rio Vista
A. I get calls daily from buyers wanting waterfront property; most wanting something for under $200k, “just a small piece of land to dock their boat”. I try to gently educate people that besides being a water sport paradise, this is principally a farming community with agricultural zoning.
In Solano County, AG zoning is A160; meaning no subdivides below 160 acres, and only 1 home per 160 acres. In Sacramento, there are AG plots from 40 acres and up, still 1 house per the acreage designation. If there are multiple homes on the property “grandfathered” in, all must convey on 1 sale. There are some smaller plots, and yes, there are some waterfront lots and homes; but, the prices start at $400k and up.
The greater Delta network of sloughs consists of 55 islands, each with a levee around the island. On most waterfront property, the home is on 1 side of the levee with the boat dock on the other side, and many times on top of that levee is a public road. If this is an older home, then it’s built on the ground (not raised above the flood plain), meaning there is no view of the water and a road has to be crossed to get to the dock. On new construction, the home has to be raised above the flood plain, which does afford a view. Those few developments where the home is direct to the water are in high demand; the prices going up according to that demand.
Waterfront is somewhat constrained, and that reflects in the price.
Posted on February 8, 2019 at 12:30 pm by Sam Richards