A recent NAR profile of home buyers revealed that 25% of buyers are uninformed about closing costs. At the Trinity Properties Group, we want to work hard to educate our clients throughout the buying process, so you do not have any unpleasant surprises.
Whenever you are ready to begin searching for a new home,
it is important to work with a reliable Realtor and a trustworthy local lender. You
can find my contact information below, as well as the contact information for
Jason Cooley, RMLO. As your Realtor, we will work together as your personal
advocates and help you through the process so you can better understand the
charges and fees that will be due during the transaction as well as at the
closing table.
Want an example?
Of
course, each transaction is different; but here is a quick overview of
potential costs in the DFW area to get you started.
Earnest and Option Fees
Generally,
there are two fees you will pay to the title company as soon as your offer on a
home has been accepted by the seller. Those are the Earnest Fee and Option
Fee. As long as you proceed to closing this transaction according to the
contract, both of these fees will be applied to your costs at closing. If, however, you choose to terminate the
contract during the option period, you will forfeit the Option Fee, but the
Earnest Fee will be refunded to you by the title company. Only in the event that you breach the
contract, would you forfeit your earnest money.
Inspection
During
the option period (usually the first 5-7 days after your offer has been
accepted), your Realtor® will help you schedule an inspection. The inspector’s
fee will be paid by you at the time of the inspection and, depending on the
size of the home and systems inspected, generally costs around $400-$600. Any
other inspections you might choose to have completed would also need to be paid
for by you at the time of service.
Survey
If
the seller has a current survey, which the title company is able to use, you
should not need to purchase a new survey. If they do not, or if the seller’s
survey is not usable by the title company, you will need to pay to have a new
survey completed. The survey is typically ordered as soon as the option period
ends. An average cost for this is around $500. Depending on the title company,
you may be asked to pay this at the time of service. Some title companies will accept
payment for this at closing. You can check with your Realtor® to find out when
you will need to make this payment.
Appraisal
Buyers
who are obtaining a mortgage for their purchase will need to plan for
associated lender fees. For example, your lender will order an appraisal to be
completed as part of their approval process. Appraisals are also typically ordered
as soon as the option period ends. This generally costs around $500 and is due
at the time of service. Your lender will keep you informed about the process
and how to make payment for the appraisal.
Monies due at closing
In
addition to these fees, paid during the transaction process, there are the
monies you will bring to closing. This includes your down payment, lender fees,
title fees and your share of the prorated taxes and HOA fees, if applicable.
Of
course, the actual amount of closing costs for you will depend on the contract
you make with the seller. Because of low inventory, many sellers are receiving
multiple offers on their homes and ultimately sell for over asking price. To
make offers more competitive, most buyers are choosing to pay fees that were
traditionally paid by sellers. These costs may include title policy premiums,
HOA transfer fees, a portion of the Realtor® commissions, home warranty costs,
etc. Your Realtor® will help you understand how each of these choices will
affect the amount you will need to pay at closing.
Example:
Using
the average home price in Dallas of $480,000, here is an example of what
closing costs could be for a buyer in today’s market.
For
the sake of my example, let’s say the buyers plan to put down a 5% down
payment, choose to pay the title premium rather than asking the seller to do
this, are buying in a neighborhood with a mandatory HOA fee of $2000 per year, yearly
taxes of $7,000 and the purchase will close on 05/30/2022.
Example of fees these buyers
would typically pay during the process:
Earnest:
$4,800 (Will be credited back to them at closing)
Option:
$150 (Will be credited back to them at closing)
Inspection:
~$400
Survey:
~$500
Appraisal:
~$500
~ $6,350
Example of fees these buyers
would typically pay at closing (usually about 30 days after their offer is
accepted)
Down
payment of 5%= $24,000
Prorated
Taxes= $2,916
Prorated
HOA fees= $1,173
Lender
fees + escrow taxes = $9,464
Title Policy and fees = $3,735
$41,288
-
$4,950 Credit from Earnest and Option monies
$36,338
So, in my example, the buyers
would need to be prepared to pay a total of approximately $43,000 in costs
(which includes their down payment) to purchase their new home. This is just
one possibility in thousands of potential scenarios.
If you are ready to purchase
and would like to see a more realistic breakdown of cost for your individual
situation, please, reach out. I’d love the opportunity to serve as your
Realtor®
Jennifer Courbier, Realtor®
jenniferctexasrealtor@outlook.com
Jason Cooley, RMLO
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