What are closing costs?

[Chris Stromdahl]

I know this may sound like a crazy question, but I would like it clarified.

• What are closing costs?
• What expenses are including in the closing costs?
• Any general rule of thumb/guideline for estimating closing costs?

Thanks, Chris

[Hattie Dizmond]

That's a loaded question and depends on a lot of things, including what state you're in, whether you're the buyer or seller, and what your financing is.

Here's a rundown of Seller Closing Costs in Texas...

• Settlement Fee - Charged by the title company to close the sale and is a % of sell price.
• Document Prep - Yep...the title company charges for preparing the documents for closing.
• Recording Fees - Any necessary filings to clear the title/deed.
• Title Insurance
• Misc Fees

Texas Buyer Closing Costs...

• Settlement Fee - Charged by the title company to close the sale and is a % of sell price.
• Recording Fees - Charge for recording the new deed
• Loan Fees - Origination fee, doc fee, points, down payment, etc.

Those are the standard charges, broken down by Buyer & Seller, in Texas.  Additionally, depending on the deal and the availability of recent, existing reports, you may be looking at fees for...

• Sales Commissions
• Appraisals
• Surveys
• Inspections

Sellers are often asked to pay for specific items or contribute a fixed $ amount toward a buyer's closing costs. There are specific items required to be paid by specific parties. There are also limits, when FHA or Fannie/Freddie loans are used, as to the max that a seller can contribute to a buyer's closing costs. I believe it is currently 6% of the purchase price.

You should contact a title company or closing attorney for a breakdown and estimate of charges specific to your state.

Hope that helps!