Wondering how much cash you need beyond your down payment to buy in Petaluma? You are not alone. Closing costs can feel like a moving target, especially with local taxes, title fees, and lender choices in the mix. This guide gives you a clear breakdown of typical buyer costs, who usually pays what in California, how Petaluma’s local practices may affect you, and simple ways to lower your cash to close. Let’s dive in.
What closing costs cover in Petaluma
Buying with a mortgage includes several cost categories. Exact amounts depend on your price point, loan program, lender, and the property. Common range: 2% to 5% of the purchase price for financed buyers, not including your down payment.
Loan and lender fees
These are tied to your financing and are typically buyer-paid.
- Origination, processing, and underwriting fees
- Discount points if you choose to buy a lower rate (1 point equals 1% of the loan amount)
- Credit report fee
- Appraisal fee
- Flood certification
Title and escrow fees
Title and escrow handle your title protection and the mechanics of closing.
- Title search and title insurance policies
- Escrow fee for managing funds and documents
- In many California areas, the buyer often pays the lender’s title policy and the seller often pays the owner’s policy. Petaluma customs can vary, so confirm with your escrow officer and agent.
Inspections and third-party reports
Most buyers order inspections before closing.
- General home inspection
- Pest or termite inspection
- Sewer, roof, chimney, structural, or other specialized inspections if needed
Prepaids and escrow reserves
These are not fees, but they still require cash at closing.
- First-year homeowners insurance premium
- Property tax prorations between buyer and seller
- Prepaid interest from funding date to month-end
- Mortgage insurance or HOA dues if applicable
- Escrow impounds for taxes and insurance if required by your lender
Recording, transfer, and local charges
You will see government and administrative items.
- County recording fees for your deed and loan documents
- Documentary transfer taxes that may be charged by the county, city, or both
- Notary, courier, and wire fees
- HOA transfer or move-in fees if the property is in an association
Transfer taxes and local norms
California does not have a single statewide transfer tax rate. Counties and some cities set their own documentary transfer taxes, and they can change. In many California transactions the seller pays the transfer tax or it is split by custom, but this can vary in Sonoma County and Petaluma and can also be negotiated. Your escrow officer can provide the exact amount and who is paying it for your deal.
Also review parcel taxes and special assessments that appear on property tax bills. These are prorated at closing and can affect your prepaids and escrow reserves. Your title company and the Sonoma County Assessor records can confirm property-specific assessments.
Who pays what in California
Local custom guides many charges, but most items are negotiable and should be written into your purchase agreement.
- Sellers commonly cover real estate commissions, owner’s title insurance in many areas, and clearing existing liens. They may also cover transfer taxes depending on local practice.
- Buyers commonly cover lender fees, the appraisal and credit report, the lender’s title policy, their share of escrow, recording fees for the mortgage, and prorated taxes and insurance.
- Your lender can require you to pay for certain items even if a contract says otherwise, so align with your loan officer before finalizing your offer.
- Seller concessions can reduce your cash to close, but loan programs set limits on how much the seller can contribute.
How to lower your cash to close
You have options to manage upfront costs. Choose the approach that fits your budget and time horizon.
- Take a lender credit. Accept a slightly higher interest rate in exchange for a credit toward closing costs. This lowers cash needed now but raises your monthly payment.
- Pay discount points. Pay points at closing to lower your rate and monthly payment. This increases upfront cash.
- Ask for seller credits. Negotiate a seller contribution toward closing costs, subject to loan program limits and appraisal.
- Compare lenders. Review multiple Loan Estimates to find competitive rate and fee structures.
- Time your closing. Closing near month-end can reduce prepaid interest.
Illustrative example — numbers for demonstration
The following example is for illustration only. Your exact costs will vary based on price, loan terms, and local charges. Confirm numbers with your lender and escrow officer.
- Purchase price: $700,000
- Down payment: 20% = $140,000
- Loan amount: $560,000
- Estimated closing costs at 2.5% of price: $17,500
- Lender fees, appraisal, credit reports, and points: $6,500
- Title and escrow: $3,500
- Prepaids and escrow reserves: $6,000
- Recording, wire, and HOA transfer: $1,500
- Total cash to close: $157,500
- With a $10,000 seller credit, cash to close would be $147,500, subject to loan program limits
Petaluma buyer checklist: cash to close
Use this step-by-step list to build a clear budget and avoid surprises.
- Get pre-approved and request a Loan Estimate
- Ask your lender for a Loan Estimate that outlines rates, fees, and prepaids. Compare estimates if you are shopping lenders.
- Review an itemized estimate of fees
- Focus on appraisal, lender fees, title and escrow charges, transfer taxes, and prepaids. Ask how rate options or credits change cash to close.
- Order a preliminary title report and verify property taxes
- Have your agent or escrow request the prelim. Confirm parcel taxes and special assessments that will be prorated at closing.
- Confirm transfer taxes and who pays them
- Ask your escrow officer to quote county and any city transfer taxes for Petaluma and to confirm which party is paying them per local custom and your offer.
- Gather funds and documents
- Collect bank statements and gift letters if applicable. Use wire instructions only from your escrow/title company and verify by phone before sending funds.
- Review your Closing Disclosure
- Your lender must provide the Closing Disclosure at least three business days before closing. Review the final numbers and ask questions early if something does not look right.
Protect your funds at closing
Wire fraud is a real risk. Always verify wire instructions with your escrow or title officer by calling a known phone number before you send money. Never rely solely on email for wire details.
Ready to plan your purchase?
If you want a clear, local strategy for closing costs and a smart offer plan in Petaluma, let’s talk. As a North Bay-focused advisor, I will help you compare lender options, confirm title and transfer tax allocations, and negotiate credits that fit your goals. Connect with Jennifer Bowes to get started.
FAQs
What are typical closing costs for a Petaluma buyer?
- Buyers using a mortgage commonly pay about 2% to 5% of the purchase price in closing costs, not including the down payment; exact amounts depend on your loan, price, and local fees.
Who usually pays the transfer tax in Petaluma transactions?
- It varies by local ordinance and custom, and it can be negotiated; your escrow officer can confirm the amount and whether buyer or seller pays in your specific contract.
Can a seller help pay my closing costs in Sonoma County?
- Yes, sellers can provide credits toward buyer closing costs within loan program limits; coordinate with your lender and write the credit into your purchase agreement.
Will my lender require an escrow account for taxes and insurance?
- Many lenders require an impound account, which means you will deposit a few months of taxes and insurance at closing and pay them monthly with your mortgage.
What is the difference between owner’s and lender’s title insurance?
- Owner’s title insurance protects your equity in the home, while the lender’s policy protects the lender’s loan; who pays which policy depends on local custom and negotiation.
