What are closing costs?
Closing costs are fees charged by lenders and third parties that are related to the purchasing of a home. Please note, these fees are in addition to your down payment.
Who pays closing costs?
The actual responsible party for paying the closing costs is the borrower/buyer. You can always ask your Realtor to negotiate some or all of the closing cost into the offer.
What’s included in the closing cost?
There are a number of charges that can be added into closing costs. The total amount charged is usually between 2-6% of the loan amount. Some of the charges that might appear in closing costs include:
- Loan Origination Fee – usually amounts to 1% of the purchase price
- Loan Discount Points – varies with market conditions and each point is 1% of the loan amount
- Credit Report
- Loan Underwriting Fee
- Appraisal Fee – about
- Mortgage Broker Fee
- Tax Related Service Fee
- Processing Fee – approximately
- Lender Title Policy – approximately
Home Owner’s Association Fees
- HOA Transfer Fee – Depends on the association(s
- Loan Prep Fees
- Notary Fees
- Title Insurance
- Recording Fees
- City/County Tax Fees
- State Tax Stamps
Items Required by Lender to be paid in Advance
- Interest – calculated as daily interest is accrued from close date until the end of the month; buyer owns date of close in Texas
- Hazard Insurance Premiums – typically 1 year worth of premiums plus additional 2-3 months of premiums placed in escrow/reserve account
- Mortgage Insurance Premiums (if applicable) – typically required if putting less than 20% down on home and also requires 2-4 months of premiums to be held in escrow/reserve account
- Property Taxes: Texas property taxes are paid in arrears. In addition to Seller’s credit to Buyers, 2-4 months of taxes are collected and placed in purchaser’s escrow/reserve account
Paid Outside of Closing
- Home Inspections
- Sewer scopes - optional
- Radon testing - optional
You will receive a Good Faith Estimate from your lender
within 3 days following your loan application submission, which will give you
an estimate of the amount of funds you will need to close on your home.
Written by Diana Walton
Diana Walton Properties
Champion Real Estate Group
License Real Estate Consultant
Buy, Sell, Lease, Investors
Certified Negotiation Expert (CNE)