Buyers and Sellers Average Closing Costs Calculator

How much are the average estimated closing costs for sellers?

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How much are the average estimated closing costs for buyers?

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Buyer closing costs are often 2% to 5% of the home purchase price. Typical closing costs for a buyer of a $250,000 home might range between $5,000 and $12,500.

Closing costs may be rolled into the loan amount or be paid at closing, depending on the loan program, loan characteristics and individual lender practices. Reach out to lenders you are considering learning about available loan program types and options for closing costs.

What are the typical real estate closing costs for buyers?

Buyers are responsible for paying certain fees associated with receiving a mortgage, along with recurring fees after close (like homeowners' insurance).

Sellers, on the other hand, usually pay buyer and listing real estate agent commissions, transfer fees and their own attorney costs. Local rules vary by jurisdiction, however, and many items can be negotiated by contract.

Closing costs for buyers

Here is a quick breakdown of home buyer closing costs.

One-time fees

Appraisal fee
Reinspection fee
Credit application, credit report and credit supplement fees
Mortgage origination fee
Lender’s title insurance policy (optional owner’s title insurance)
Escrow fee
Home inspection fee (optional)
Closing attorney fee
Courier fee
Bank processing fee
Recording fee
Notary fee
Loan discount points
Homeowners' association transfer fees

Recurring fees

Homeowners insurance
Property taxes and tax servicing fees
Mortgage insurance premiums
Flood certification fee (in some areas)

Appraisal fees

Lenders typically require an appraisal as part of the underwriting process, before financing a home purchase. Appraisals cost approximately $300 and may vary in price depending on the location and size of the property. The lender hires an appraiser to provide the fair market value of the home, and the buyer pays the lender.

Sometimes a second appraisal fee is charged, called a reinspection fee. This is common when the seller completes repairs on the home that may change the value of the property. A reinspection fee, like the first appraisal, is usually around $300.

Credit report fees

Lenders charge a credit report fee of approximately $50. These covers collecting your credit report from all three credit bureaus.

During underwriting, lenders may also charge a credit supplement fee to pay for a third-party company to verify that the information on your loan application is up to date. Credit supplement fees are about $25 for each item that requires verification, so the cost to buyers can range from $15 to $100.

Credit applications are always required for a loan, and the cost for a credit application ranges from $300 to $500. However, not all lenders charge an application fee to process the request.

Mortgage origination fee

Every lender will charge a mortgage origination fee, which covers their service and administrative costs. The average loan origination fee is 1% of the total loan amount. For example, on a loan of $300,000, the loan origination fee would be $3,000. Buyers should shop for lenders with both experience and low origination fees.

Title insurance policy fees

Lenders typically require borrowers to purchase insurance to protect the financial institution from future title claims. This policy is called lender’s title insurance and can cost the buyer between $500 and $3,500 depending on the location and size of the property. Copy & paste link for Information on Title Insurance Texas Department of Insurance: https://www.tdi.texas.gov/title/titlefaqs.html

Additionally, owner’s title insurance protects the buyer from future claims against the title. The seller typically pays for the owner’s policy, but this needs to be negotiated and detailed in the purchase and sale contract. Owner’s title insurance policies range from $500 to $3,500 depending on the location and size of the property.

Escrow fees

During the purchase and sale transaction, your funds will enter into a holding account managed by a third party — an escrow company. When the transaction is complete, the escrow representative will disperse your down payment, fees and loan to the appropriate individuals. Escrow fees range from $500 to $2,000, depending on your location, or about 1% of the home sale price. The cost is typically split evenly between the buyer and seller, but this must be negotiated and detailed in the contract.

Home inspection fee

A home inspection is a common contingency for a home purchase. As the buyer, you can hire an inspector to evaluate the condition of the home and its systems prior to purchase. A home inspection will cost approximately $250 to $700 depending on the size of the property. You will pay the inspector for their service out-of-pocket, and this amount is separate from the purchase and sale transaction.

For mortgaged home purchases in many states, an attorney must oversee the closing process. This type of attorney is known as a closing attorney and does not represent the buyer or seller in the transaction. The cost is typically split between the buyer and seller. Settlement costs for using a closing attorney or escrow company to handle the closing of a transaction can range from $500 to $1,500 depending on your location.

Private real estate attorneys, or borrower’s attorneys, are an additional and optional cost for buyers who want a specialist to assist them with contract-related issues or professional advice beyond the scope of their agent’s abilities. Private real estate attorneys charge by the hour and rates varies based on their level of expertise and services provided.

Documentation fees

During a financed home purchase, several institutions need to process information and create official records.

The courier fee allows lenders to send your documents to necessary parties, at a rate of about $20.
The bank processing fee pays the bank for handling the necessary loan documentation. It’s usually between $25 and $100.
The lender uses the recording fee (approximately $50) to pay the county to file a public record of the transaction.
A notary makes your signature official. Notaries charge by the signature, about $100 for closing paperwork but they can add fees for their travel.

Loan discount point fees

When locking your interest rate with your lender, you’re allowed to buy down the rate. To do this, you pay “points” — essentially, paying interest in advance. One point is equal to 1% of the loan; but that does not translate to a 1% drop-in interest rate. Not all buyers choose to buy down their interest rate, but when they do, the rates vary by lender.

HOA transfer fee

When you buy a property that is managed by an HOA, there is typically a transfer fee that covers changing the property owner. During the negotiation, you can detail which party will pay the transfer fee. HOA transfer fees generally cost about $200. In addition to the transfer fee, your monthly HOA fee will likely be mortgaged. The first payment is often prorated, depending on your closing date.

Homeowners insurance

As a stipulation of your financing, you will be required to purchase homeowners' insurance. You will continue to pay the insurance premium on a yearly or twice-yearly basis directly to your insurer, or on a monthly basis via an escrow payment that is part of your monthly mortgage payment to your loan servicer. Homeowners insurance policy fees range based on the amount of coverage and the size of the property.

Property taxes

Your property taxes will be prorated based on your closing date. Some buyers pay their taxes in lump sums annually or biannually. If you don’t pay this way, you might escrow the taxes, which means they would be included as an escrow line item in your monthly mortgage payment to your loan servicer.

Texas buyers can search property taxes on google by entering the name of any county in Texas CAD example: Lavaca County CAD or http://www.lavacacountycad.com

Mortgage insurance premiums

If your loan amount is more than 20% of the value of the home, you are typically required to pay insurance to protect your lender’s investment. Mortgage insurance is generally escrowed but may vary from lender to lender. Some lenders will also charge a one-time application fee for mortgage insurance.

Flood insurance

Depending on the location of your property, you may also be obligated to purchase flood insurance to help protect your lender’s investment. Flood insurance policies range by risk level, based on location.

What are the closing costs for cash buyers?

Cash buyers are still required to pay for things like notary fees, property taxes, recording fees, and other local, county and state fees. Unlike a buyer who is using financing, cash buyers won’t have to pay any mortgage-related fees. But most cash buyers still opt to pay for things like appraisals, inspections, and owner’s title insurance.

Can home purchase closing costs be negotiated?

The closing costs you’ll pay may be negotiable, depending on who you’re working with and what they’re willing to offer — but buyers are always charged some closing costs. Your location and lender selection can have a major impact on how much you pay in closing costs. The closing disclosure statement will identify any costs that are your responsibility.

How to reduce closing costs

Shop various lenders for the lowest origination fees.
Utilize military benefits for VA financing, if eligible.
Ask the seller to pay your closing costs as part of the negotiations.

Can sellers provide a closing cost credit?

As a buyer, you can request that the seller pay for some or all of your closing costs as part of the offer negotiation. Negotiating concessions is common. According to the Zillow Group Consumer Housing Trends Report 2019, 81% of sellers make some kind of trade-off with the buyer to facilitate the sale of a home. This can be a beneficial strategy if you don’t have enough cash available after paying your down payment to pay for your closing costs, too. Additional closing cost credit may be available based upon the interest rate chosen with the lender.

First-time home buyer closing costs

First-time home buyers can sometimes get their closing costs paid via a down payment assistance program. These programs are designed to help first-time buyers cope with how much cash is typically needed to buy a home. Often, these buyers can get a down payment loan, which will also cover a portion of their closing costs. These loans usually don’t charge interest but are generally required to be repaid when the property is sold or refinanced within a set period of time.