Below I have explained the Closing Costs for both buyers and sellers so no matter which side you find yourself on, you are aware of what is happening to some degree on the other side. This will help you negotiate terms and understand what is being considered on both sides.
Buyer Closing Costs
Buyer closing costs in Texas seem small, but they can add up pretty quick. Here’s what you’ll have to pay:
Loan Application and Origination Fees
If you're financing the loan, the lender typically charges a loan origination fee, application fee and underwriting fee. Every lender is different but these usually cost between $800-$2,000. for this reason alone I highly recommend shopping at least 2 if not 3 lenders. For more information on credit while home shopping email Janine: Broker@janinetherealtor.com
Credit Report Fee
Your lender will pull your credit report several times during the loan application process to make sure your finances haven’t had a crazy change. You’ll have to pay for each credit report—even if you’re debt-free. These usually cost $50-$80/pull.
Appraisal Fee (typically paid prior to closing)
Before closing, you’ll need an appraiser to assess the home’s value. Then you and the seller can negotiate a final sale price based on the home’s fair market value IF the value does not come back satisfactory. These usually cost $400-$900 - some lenders will cover these costs for you or are able to roll them into closing costs, make sure you ask them how this expense is paid.
Home Inspection (Paid at time of scheduling/purchase)
Another up-front cost is the home inspection. A home inspection is one of the best ways to make sure you’re getting a good deal on the house and ensuring you're not buying more of a project than you can afford and easily handle/manage. Generally, if there are any major problems you did not see at the initial showing, they should turn up during the inspection. These usually cost $300-$700 depending on the size of the home, age, and any add-ons such as septic systems, sprinkler systems, and pools.
Survey Fee
Many property owners might not know exactly where their property line is, have a survey that is copywritten and therefor not acceptable to title or the property has changed in significant ways that would warrant a new survey to be drawn— If a new survey is needed it is usually a Buyers expense. A Survey usually costs $400-$700 . For more information on Surveys email Janine: Broker@janinetherealtor.com
Prepaid Costs
Prepaid costs cover a variety of home-buying expenses, like your escrow account, prepaid interest, first year of homeowners insurance, and private mortgage insurance premium if you're not putting 20% or so down. These usually make up the bulk of the actual closing costs. However they are not to be considered as fees, as these prepare your escrow account. For more information on escrow accounts email Janine: Broker@janinetherealtor.com
Discount Points
With mortgage discount points, you pay the lender an up-front fee (essentially prepaid interest) in exchange for a lower interest rate. A discount point is a .25% lower interest rate for 1% of the loan amount. So when financing $300,000 at 5.25%, if you want a 5% rate its going to cost you $3,000.
Seller Closing Costs
Sellers have fewer closing costs than buyers. But sellers usually offer to pay a portion if not all of one of the biggest closing costs— agent commissions.
Real Estate Agent Commissions
Real estate commissions are always negotiable, however the "norm" is 5-6% paid to the sellers agent. The listing agent then splits that % with a buyers agent. Otherwise, the buyer comes out of pocket for the remainder of any commissions due the buyers agent that the seller did not agree to pay. For more information on commissions email Janine: Broker@janinetherealtor.com
Homeowners Association Documents
If you live in a homeowners association (HOA), you’ll need to give the buyer a copy of the HOA bylaws by purchasing a resale certificate. This document lists monthly dues and any money you owe the HOA before you sell the house, property restrictions and responsibilities for ownership. HOA Resale Certificates range from $300-$1200.
Mortgage Payoff
You’ll have to use the profits from the sale to repay any money you owe your lender. The buyer will then take out their own separate mortgage instead of taking over your current loan unless it is an assumable loan and they qualify, though this is rare.
Seller Concessions
If you negotiated a repair credit instead of physically fixing any items, these are considered a closing cost.
Shared Closing Costs
Some closing costs are negotiable in Texas—it doesn’t really matter who pays them, as long as they get paid. For other closing costs, buyers and sellers typically split the costs evenly.
Escrow Fees
Escrow companies collect and disburse funds, do title research and facilitate closings. Since both buyers and sellers need these services, you’ll split the costs. Fees range from $300-$600 per side.
Title Search and Title Insurance
Title insurance is dictated in the TREC 1-4 contract to be paid by either the buyer or seller or both if you check both boxes. This is a fee that can be shared. The general rule of thumb for the price of title insurance is about 0.75% of the sales price. See here for a title insurance chart.
Prorated Property Taxes
The taxes are prorated from the day of closing. Depending on what time of the year it is, and how the seller pays their taxes, escrow or in full, the proration may mean either the Buyer or the Seller owe the other party money to meet escrow requirements for the sale and transfer of property.
Recording Fees
Home mortgages and deeds have to be filed—or recorded—with your county. The buyer pays the recording fees. The seller pays an additional recording fee to update the records after they take care of any issues, like unpaid bills or municipal liens. These are usually $50-$250 per side.
If there are other questions you may have about the cost of buying and selling email Janine: Broker@janinetherealtor.com I'd be more than happy to help you understand the process so long as you are not already represented. If you are already represented, please refer to your agent, they should be able to get you any and all information that you require to make an informed decision.
Janine
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