Closing Costs

Closing costs can be a confusing and overwhelming aspect of purchasing a residential property, but it's essential to understand them in order to make an informed decision. In Texas, the common closing costs for a residential property can vary, but there are some fees that are typically included. In this post, we'll take a closer look at what you can expect to pay when closing on a home in Texas.

1. Loan Origination Fee: This fee is charged by the lender to cover the cost of processing your mortgage loan. The amount can vary, but it is usually a percentage of the loan amount and can range from 0.5% to 1%.

2. Underwriting Fee: This fee covers the cost of reviewing and verifying the information in your loan application. The amount is usually a flat fee and can range from $200 to $600.

3. Appraisal Fee: An appraisal is a necessary step in the mortgage process as it determines the value of the property you're purchasing. The fee for this service is typically around $400 to $500.

4. Credit Report Fee: Your lender will request a credit report to determine your creditworthiness. The fee for this report is usually around $50.

5. Survey Fee: A survey of the property is often required by the lender to ensure that the property is properly zoned, has proper boundaries, and has no encroachments from neighboring properties. The fee for a survey can range from $400 to $600.

6. Title Insurance: This insurance protects the lender and the buyer from any title-related issues, such as liens or disputes over ownership. The cost of title insurance varies based on the value of the property, but it's usually around $1,000 to $2,000.

7. Escrow Fees: Escrow fees are charged by the company handling the closing process and can range from $400 to $600. This fee covers the cost of setting up and maintaining the escrow account, which holds the funds for paying property taxes and insurance.

8. Recording Fees: This fee covers the cost of recording the transfer of ownership with the local government. The fee is usually a few hundred dollars.

9. Homeowner's Insurance: Homeowner's insurance is required by the lender and covers any damage to the property. The cost of this insurance can vary depending on the value of the property and the coverage selected.

10. Property Taxes: Property taxes in Texas are paid in arrears, so the buyer will typically pay a prorated amount for the year at closing, based on the date of closing.

It's important to note that these are estimated costs, and the actual closing costs for a residential property in Texas can vary based on a number of factors, including the property value, location, and the lender. It's always a good idea to ask your lender for a Good Faith Estimate, which is a detailed breakdown of all the expected closing costs so that you can budget accordingly.

In conclusion, understanding the common closing costs for a residential property in Texas can help make the home-buying process a little less overwhelming. Don't hesitate to ask your real estate agent or lender for clarification on any fees, and remember to factor these costs into your overall budget when purchasing a home.