Purchasing a home is one of the most rewarding and exciting things you’ll ever do, but this reward comes with some responsibilities. This includes understanding all of the associated costs such as closing costs.
It might seem overwhelming at first, however, being able to understand the process will make buying your new forever home much easier. Whether you’re a first-time home buyer or a seasoned veteran who needs a refresher, this blog post explains what closing costs include when purchasing a new home in Austin.
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What Are Closing Costs?
Closing costs refer to the fees and expenses that are incurred as part of a real estate transaction. These costs are usually not part of the purchase price of the property but are additional expenses that buyers and sellers have to pay. Some of the common types of closing costs include appraisal fees, title search fees, attorney fees, and loan origination fees.
The total amount of closing costs can vary depending on the price of the property and the location of the transaction. Buyers and sellers need to review their closing costs and understand the breakdown of all the fees and expenses associated with a real estate purchase.
Who Pays Closing Costs When Selling a House in Texas?
One question that often comes up is who is responsible for paying the closing costs when it comes to closing on a property. The answers depend on the terms agreed upon between the buyer and seller. It is important for both parties to understand what is included in the closing costs, such as the cost of the appraisal, title search fees, and any insurance fees.
Seller Closing Costs
Real Estate Agent Commission
Outstanding HOA Fees
Buyer Closing Costs
Loan Application and Origination Fees
Credit Report Fee
Discount Points if applicable
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How Much Are Closing Costs in Texas?
As a home buyer or seller in Texas, you might be wondering how much you’ll be expected to pay in closing costs. The short answer is that your closing costs will depend on a variety of factors such as the following:
Purchase Price of the Home
Type of Mortgage
The average closing costs for buyers are typically between 2% to 6% of the purchase price while the average cost of closing for sellers is between 6% to 10% of the home’s purchase price.
This might seem like a significant amount, but it’s important to remember that closing costs are necessary to finalize the sale and product of all parties involved.
RELATED: Concurrent Closing: Sell Before Buying a Home in the Austin Housing Market
Are Realtor Fees Included in Closing Costs?
If you’re in the process of buying or selling a home, you might be thinking, do closing costs include Realtor fees? According to the website Realtor.com, the home seller is almost always responsible for the real estate agent’s commission. The commission is between 5%-6% of the home’s purchase price and the seller’s agent shared part of it with the buyer’s agent.
How to Reduce Closing Costs When Buying a Home in Austin?
The costs associated with buying a home can add up quickly, however, there are a couple of ways to reduce closing costs. One is through closing cost assistance from the state of Texas, SETH or the Southeast Texas Housing Finance Corporation is available in certain communities in southeast Texas.
Next is through the Texas Homebuyer Program. The Texas Department of Housing and Community Affairs (TDHCA) offers assistance to first-time home buyers and veterans through the program. Take note that there are requirements that you’ll need to meet including income, credit score, and the sale price of the home.
Lastly, don’t forget to review all documents and contracts carefully. Ask questions if anything is unclear to you.
Closing Costs in Austin, Texas
Understanding closing costs when buying or selling a home in Austin is a necessary part of buying a home. Keep track of expenses and stay in the know about the costs associated with closing on a house. This doesn’t just help you prepare for what lies ahead, but it can also end up saving you money in other expenses you might have during the real estate transaction.
If you're buying a home, it's worth working with a real estate agent who can help you understand more about closing costs. If you’re considering buying or selling a home in Austin, Texas, CLICK HERE TO SPEAK TO A REAL ESTATE CONSULTANT!
Posted by Ryan Rodenbeck