Who Pays Closing Costs in Texas?

Who Pays Closing Costs in Texas?

In Texas, both the buyer and the seller typically share the responsibility for paying closing costs, but the specific costs each party pays can vary based on negotiations and the terms of the purchase agreement. Here is a general breakdown of common closing costs for each party:

Buyer’s Closing Costs

  1. Loan Origination Fees: Fees charged by the lender for processing the loan.
  2. Appraisal Fees: Cost of having the property appraised to determine its value.
  3. Credit Report Fees: Fees for obtaining the buyer’s credit report.
  4. Home Inspection Fees: Cost of a professional home inspection.
  5. Title Insurance (Lender’s Policy): Insurance protecting the lender against title defects.
  6. Prepaid Interest: Interest on the mortgage that accrues between closing and the first payment.
  7. Property Taxes: A portion of property taxes, depending on the time of year the purchase is made.
  8. Homeowner’s Insurance: The first year’s premium for homeowner’s insurance.
  9. Recording Fees: Fees for recording the deed and other documents with the county.

Seller’s Closing Costs

  1. Real Estate Agent Commissions: Typically 5-6% of the sale price, split between the buyer’s and seller’s agents.
  2. Title Insurance (Owner’s Policy): Insurance protecting the buyer against title defects.
  3. Property Taxes: Prorated share of property taxes up to the closing date.
  4. Settlement Fees: Fees charged by the title company or escrow agent for handling the closing.
  5. Repairs or Concessions: Any agreed-upon repairs or concessions made to the buyer as part of the negotiation.
  6. HOA Fees: Any unpaid homeowner’s association fees or transfer fees.

Negotiable Costs

Certain costs, such as title insurance, escrow fees, and even some inspection fees, can sometimes be negotiated between the buyer and the seller. It’s essential for both parties to review the closing disclosure form provided before the closing date to understand all costs involved and ensure they match the terms agreed upon in the purchase contract.

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