Preferred Properties of Texas

The Preferred way to buy & sell property for over 25 years

(254) 965-7775
  • Home
  • Search
    • Search All Listings
    • Exclusive Listings
    • Featured Listings
    • Texas Farm & Ranch Real Estate
    • Market Reports
    • Login / Register
  • Cities
  • Blog
  • About Preferred Properties of Texas
    • About Us
    • Testimonials
    • Our Google Reviews
  • Contact

Closing Costs on a Mortgage: What Are They?

June 2, 2020 by chorton Leave a Comment

Closing Costs:

The term “closing costs” usually includes a wide range of fees necessary when you’re purchasing a house: fees for an attorney, a title search, title insurance, taxes, lender costs and homeowners insurance. The amount you’ll pay in closing costs often averages 2% to 5% of the purchase price, based on the size of the loan and local taxes and fees.

If you’re buying a home, your loan estimate should include an estimate of closing costs. Shortly before your closing, you should receive your closing disclosure, a document that provides final details about your loan and your closing costs. These costs may include the following:

Lender fees:

Some lenders wrap all their costs into an origination fee, while others break them out into a list of such things as courier fees, appraisal costs, administrative fees, processing fees, a credit check, transfer taxes, a flood certification if one is required, and underwriting fees.

An optional closing cost is a discount point that is about 1% of the loan amount. Discount points can be used to lower your interest rate. Consult with your lender to discuss the pros and cons of paying discount points. If you’re cash-poor, you’re less likely to want to pay extra upfront to bring down your interest rate.

Title fees:

About 70% of closing costs are title-related, so shop for title service if possible: title search, title insurance and settlement services. Settlement fees can vary by several hundred dollars from one company to another. To compare fees, make sure you understand what’s covered, including a title search and courier fees.

Lenders require that you purchase title insurance — for your and the lender’s protection. Suppose someone claims an ownership right to the home or says he or she hasn’t been paid for work on the property and has a lien against it. Title insurance protects you if previous owners failed to pay taxes.

Prepaid costs:

You may be required to set up an escrow or impound account to collect homeowners insurance and property taxes. If you make a down payment of 20% or more, you may be exempt.

At closing, you’ll pay one year of homeowners insurance plus two months of premiums to be kept in reserve. You’ll also be required to pay two to six months of property taxes, depending on when the tax bill is due. This can add thousands of dollars to closing.

You’re not likely to avoid paying closing costs entirely, even though some of the costs can be negotiated with sellers who typically pay the real estate agent’s commission. Some costs, like transfer taxes and property taxes, can’t be changed, but you can ask sellers to raise the purchase price in exchange for a credit at the settlement table to cover closing costs. This lowers your out-of-pocket expenses. When it’s a buyer’s market, you can ask sellers to pay closing costs and not raise the price to cover them. You may request your lender to pay the closing costs. A slightly higher interest rate can be charged to recoup the money.

Be sure to keep in close communication with the real estate agent, your attorney and other financial professionals to be sure you understand what your costs are as you head toward closing date.

Interested in knowing more about different mortgage programs? Click Here

Whether you are a first time home buyer or buying your 5th home the experienced agents at Prefered Properties of Texas are here to help you!

Filed Under: Blog, Buying a home, Real Estate Advice, Selling Your Home Tagged With: advice, buying a home, buying homes, first time home buyer, Homes for sale Stephenville TX, land for sale in texas, Preferred Properties of Texas, ranches for sale in texas, real estate, texas ranch land for sale

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Preferred Properties of Texas

Preferred Properties of Texas

The Preferred Way to Buy and Sell Property
for Over 25 Years
(254) 965-7775 Office
Contact Preferred Properties of Texas
Listing Alerts Market Reports Your Home's Value

Search our Blog

  • Blog
  • Buying a home
  • Commercial Properties for Sale
  • Events
  • Home Improvements
  • Homes for Sale
  • Investing
  • Land for Sale
  • lots for sale
  • Newsletter
  • Ranches for Sale
  • Real Estate Advice
  • Selling Your Home
  • Uncategorized

Preferred Properties of Texas

(254) 965-7775|Contact Preferred Properties of Texas
Preferred Properties of Texas

TREC Consumer Protection Notice  •  TREC Information About Brokerage Services
Privacy Policy  •  sitemap   •   admin   •   ©2021 All Rights Reserved  •  Real Estate Website Design by IDXCentral.com