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In Santa Cruz County, the overall property tax rate is approximately 1.25% of the assessed value of the home, including the base 1% rate set by California’s Proposition 13 plus local voter-approved levies for schools, infrastructure, and other services.
For a $1,000,000 home, this means the annual property tax would be roughly $12,500 to $12,600. When calculating buyer closing costs, the prepaid portion of property taxes due at closing typically includes a prorated amount covering the period from the closing date to the date taxes are next due. This prepaid tax is a key part of closing costs and budget planning.
Detailed Buyer Closing Cost Breakdown for $1,000,000 Home Including 1.25% Property Tax
| Cost Category | Estimated Amount | Notes |
|---|---|---|
| Loan Origination Fee | $8,000 – $10,000 | Approx. 0.8%–1% of loan amount |
| Appraisal Fee | $500 – $700 | Bank-required property valuation |
| Credit Report Fee | $30 – $50 | Part of loan application |
| Title Insurance (Lender’s) | $1,000 – $1,500 | Protects lender’s interests |
| Title Insurance (Owner’s) | $2,500 – $3,500 | Protects buyer’s ownership rights |
| Escrow Fees | $1,500 – $2,500 | Closing services fees |
| Recording Fees | $100 – $300 | County recording of deed and documents |
| Prepaid Property Taxes | $5,200 – $6,300 | Prorated portion of 1.25% annual property tax; varies by closing date |
| Prepaid Homeowners Insurance | $1,000 – $1,500 | Typically first year’s premium prepaid |
| Underwriting & Processing Fees | $500 – $1,000 | Lender administrative fees |
| Survey Fee (if applicable) | $300 – $500 | Only if required by lender or buyer |
| Miscellaneous Fees | $200 – $500 | Notary, courier, wire transfer, etc. |
Explanation of Property Tax Inclusion
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Santa Cruz County’s total property tax rate averages about 1.25%, inclusive of state-mandated base and local levies.
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Buyers must prepay the portion of property taxes from closing until the next payment due date, usually covering several months of tax liability.
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For a $1,000,000 home, the yearly tax liability is approximately $12,500; the prepaid portion at closing generally ranges between $5,200 and $6,300 depending on timing.
Including this updated projected 1.25% property tax figure in closing cost estimates gives a more accurate picture for budgeting the total upfront costs when purchasing a home in Santa Cruz County. This detailed breakdown helps buyers avoid surprises and plan their finances wisely during the homebuying process with Realtor Brian Wellikson’s expert guidance.
Loan origination fees are typically paid upfront at closing rather than being added to the mortgage loan balance. Borrowers usually pay this fee as part of their closing costs to cover the lender’s expenses for processing, underwriting, and funding the loan. The fee generally ranges from 0.5% to 1% of the loan amount and is disclosed in the Loan Estimate and Closing Disclosure forms provided during the loan process.
However, in some cases, borrowers may be able to negotiate their lender to roll the origination fee into the total loan amount, effectively increasing the loan balance. This option means the borrower pays less out-of-pocket at closing, but the overall loan amount (and therefore monthly mortgage payments) will be higher since the fee is financed over time. Not all lenders offer this option, and it depends on loan type and lender policies.
In summary:
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The loan origination fee is most commonly paid at closing as part of upfront closing costs.
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It can sometimes be financed into the mortgage loan balance if the lender permits, resulting in higher monthly payments.
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Borrowers should clarify with their lender how the origination fee will be handled and consider the impact on both upfront costs and long-term payments.
This knowledge helps Santa Cruz homebuyers plan their closing costs more accurately and make informed decisions about loan options with Realtor Brian Wellikson’s guidance.
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