You have worked hard to identify your new dream home in Dallas, Coppell, Flower Mound, Southlake, Lakewood, Irving or Frisco and now it’s closing time: Last call for every entity with even a small role in a home sale to collect their fees.
Home buyers—eager to get the keys to their new place—must first cover myriad costs, including agent commissions, attorney fees, lender fees, mortgage insurance, a title search, recording fees, real-estate taxes, survey costs and an appraisal (sometimes two on a jumbo loan).
Closing costs can vary depending on which lender is used, what state you live in, the price of the home and even the day of the month the closing takes place. Jumbo-loan borrowers—where amounts exceed $417,000 in most places and $625,500 in high-cost areas—often face the steepest closing costs because many fees are calculated using a percentage of the loan amount. But a little research and comparison shopping can help buyers reduce these out-of-pocket costs.
According to Bankrate.com, the states with the highest closing costs in 2016 were Hawaii, New York and North Carolina. The states with the lowest closing costs were Pennsylvania, Wisconsin and Kentucky.
Some geographic areas also have different expectations as to whether a buyer or seller pays certain fees. In Texas, seller will typically pay the premium for the owners title policy but this is not the case in case of new home sales in Texas.
Title insurance also can vary widely across the U.S. Here are typical closing costs in Texas.
Borrowers can also reduce out-of-pocket expenditures by wrapping the closing costs into the loan, but lenders will charge a slightly higher interest rate. When considering that option, borrowers should balance how much cash they can bring to the closing table versus how long they plan to stay in the home, she adds
More tips that may help lower closing costs:
• Explore new home incentives: If you are buying a new home, talk to the builder's preferred lender and check if that lender is offering any promotions related to title policy. Sometimes, the lenders will pay for the part of the title policy to get your business
• Shop around. Apply with more than one lender to compare origination fees quoted in good-faith estimates. You should be prepared to comparison shop and to negotiate to get the best deal
• Relationship discounts. Lenders may offer lower origination fees for their customers. Some banks may offer reduced rates depending on the dollar amount of a customer’s deposits. So check with your bank first.
• Title insurance. Texas dictates the rate that title insurance providers charge for some things like Title Insurance Policy premiums while some other costs vary from title company to title company.
•Consider small banks also: Some small banks may offer you better service and rates than bigger banks as they specialize in residential loans. Check with your local credit union before you finalize your lender.