Mortgage Closing Costs
There are three components that make up the funds due at closing: the down payment, the mortgage closing costs, and the prepaids. Regardless of what lender you choose or what program you choose, these costs will exist. There are various methods on How To Pay For Closing Costs. This page provides a breakdown of the closing fess for purchasing an existing home in Texas with a conventional loan. FHA, VA, and USDA loans will have the same basic fees as below; however, those programs will required MI/Funding Fees. Be sure to see the links below for the related videos that expand on this page and elaborate on the costs for various programs and new construction.
We know our fees are very competitive because we constantly secret-shop other lenders (and because the lending industry is extremely competitive most every lender has the same fee structure +/- about $150. If you receive an estimate that is significantly different from what we describe below, please call us to ensure you’re comparing apples to apples and that other lenders are presenting all relevant information. We will always provide accurate estimates so that you can confidently plan for closing.
CLOSING COST BREAKDOWN
We use conservative estimates to ensure there won’t be any surprises at closing. Remember that the origination charge is the only differentiation between lenders and IF another lender’s origination charges are significantly different then you can assume that the interest rate will be inversely related. The typical fees associated with a conventional loan are estimated to be:
Origination Charges for $1,250
The Origination Charges are the true lender fees of the loan and every lender must call the aggregate of their fees an “origination charge” on a Good Faith Estimate (GFE). All other fees aside from this charge will be comparable regardless of the lender as the lender does not dicate any of the other fees aside from this charge. Our origination fees ranges from $1,150 to $1,250 depending on the program. This typically consists of a $500 underwriting fee, a $500 processing fee, a $200 doc prep, a $50 admin fee, and a $33 tax cert which totals $1,250.
Other Mortgage-Related Fees for $615
The other mortgage-related fees will be the same regardless of lender. There may be a few dollar differences depending on the service providers used but these fees are within tens of dollars from lender to lender. The other mortgage-related fees consists of a range of $595 – $650 appraisal depending on the property type, a $95 tax service fee, a 34 credit report, and a $12 flood cert which total $615.
Title Fees for $615
The title fees will be the same regardless of lender. The contract will ultimately state which title company will be providing title services – so if you have a preferred title company be sure to include them on the contract during the contract negotiations. The title fees typical consist of a $300 settlement fee, a $250 lender’s title policy, and a $65 tax cert fee.
Miscellaneous Fees for $150
There may be other non-lender, non-title company fees depending on the loan and property. The one certainty is the county’s recording fee which typically estimates to be $150. Some examples of other miscellaneous fees that may exists are: a survey fee, HOA transfer fees, second lien lender fees, a final inspection, etc.
Three Major Assumptions
There are three major assumptions being made in the aforementioned breakdown and we are excluding fees: the owner’s title policy, the survey, and any applicable HOA fees. More details on why we’re excluding these items just expand the sections below.
Owner’s Title Policy
For an existing property purchases the seller has the ability pay for the tile policy. This is a negotiable item between the buyer and the seller. The title policy fee varies based on the purchase price but the costs is approximately .75% of the home’s purchase price. Check out our Title Policy Calculator for a better estimate of the title policy.
For the purchase of an existing home (that is not a bank-owned property) the sellers typically provide a survey that lenders can use. If a survey does not exists or is not accurate, it’s our opinion that the sellers should pay for a new survey. This is a point of negotiation on the contract so be sure to connect with your Realtor during your negotiations. The costs of a survey is about $400. (Note: Texas loans must have survey; loans in other states may not require a survey.)
HOA Fees – If Applicable
The aforementioned owner’s title policy and survey assumptions are accurate for the vast majority of existing home purchases but whether an HOA exists is property specific. There is an addendum to the contract that can limit your costs as a buyer on the HOA transfer fee so check with your Realtor during contract negotiations. HOA transfer fees typically range from $100 to $500 and is a one-time fee charged by the HOA when title is transferred and is used to help build their cash reserves. We call it the “welcome to the neighborhood” fee.
Other Costs May Exist
As an FYI, when purchasing an investment property for out of town buyers, there will be additional closing costs and the aforementioned assumptions may be incorrect. Many out of town buyer will choose to use a mobile notary that can be setup be the closing title company. The average cost for a mobile notary ranges from $125.00 to $250