Closing costs are the fees and prepaid expenses required to finalize a mortgage and transfer property. They typically total 2–4% of the purchase price. On a $380,000 Bakersfield home that is $7,600 to $15,200. Some costs are paid by the buyer, some by the seller, and some are negotiable. Sellers can contribute to the buyer's closing costs through seller concessions, which is one of the most effective ways to reduce the cash you need at closing.
What Is Included in Closing Costs
Closing costs fall into two categories: lender fees and third-party fees. Lender fees include origination charges, underwriting fees, and points if you are buying down the rate. Third-party fees include the appraisal, title insurance, escrow fees, recording fees, and any prepaid items. Prepaid items are not strictly fees. They are expenses collected at closing and held in escrow: typically one year of homeowners insurance, two months of property tax reserves, and prepaid interest covering the days between closing and your first payment. Prepaid items are unavoidable regardless of which lender you use. Lender and third-party fees vary and are worth comparing.
Who Pays What in a Bakersfield Transaction
Buyers pay the majority of closing costs by default, including all lender fees, the appraisal, and most of the title and escrow charges. Sellers typically pay the real estate commissions and transfer taxes. In California, which party pays which escrow and title fees is negotiable and varies by county. Kern County has local customs that differ from, say, Los Angeles County. Your escrow company will produce a preliminary settlement statement early in the transaction that breaks down every line item.
How Seller Concessions Work
Seller concessions are contributions from the seller toward the buyer's closing costs, negotiated as part of the purchase contract. They are limited by loan program: FHA allows up to 6% of the purchase price, conventional loans allow 3% when down payment is less than 10%, and VA allows up to 4% plus reasonable closing costs. A buyer purchasing a $380,000 home with an FHA loan could potentially ask the seller to contribute $22,800 (6%) toward closing, which would cover most or all of the out-of-pocket closing costs. Not every seller will agree to concessions, but in a buyer's market or on a property that has been sitting, it is a legitimate negotiating tool.
Can Closing Costs Be Rolled Into the Loan
On a purchase transaction, closing costs generally cannot be added to the loan balance because the loan is based on the purchase price or appraised value, whichever is lower. However, some lenders offer lender credits, where they absorb your closing costs in exchange for a slightly higher interest rate. This is sometimes called a no-closing-cost loan. It makes sense when you plan to sell or refinance within a few years and do not want to pay costs you will not have time to recoup. On a refinance, closing costs can typically be rolled into the new loan balance if there is sufficient equity.
The closing cost conversation usually happens too late. Most buyers find out what they actually owe at the closing disclosure stage, which is three days before closing. By then, it is too late to negotiate seller concessions or restructure the loan. I give clients a realistic closing cost estimate before we write the offer so there are no surprises. If seller concessions make sense in the negotiation, we build that into the offer strategy from the start.
Watch: How Do Closing Costs Work and Who Pays Them?
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