Demystifying Closing Costs in Texas: Your Guide from a Top Realtor in McKinney

Hey there, future homeowner or seller! Brandon Scribner here, your trusted top realtor in McKinney and Allen, TX. One of the questions I hear most often from clients, especially first-time home buyers, is, "How much are closing costs, and who actually pays for them in Texas?" It's a fantastic question, and honestly, it can feel a bit like a mystery box if you're not prepared. But don't worry, I'm here to demystify this crucial aspect of real estate for you in a casual, friendly way. Let's make sure you're fully informed and prepared.

Let's dive right in. What exactly *are* closing costs? Think of them as the administrative and legal fees associated with finalizing your real estate transaction. They’re not part of your down payment, but rather a separate set of expenses incurred by both buyers and sellers to transfer ownership. These costs cover everything from lender fees to title insurance, appraisals, and even recording the sale with the county. Essentially, they ensure everything is legally sound and properly documented.

So, "How much are we talking about here in Texas?" Typically, for buyers, closing costs in Texas range from about 2% to 5% of the loan amount, not the purchase price. If you're paying cash, the percentage might be lower as you won't have lender-specific fees. For example, on a $400,000 home with a $350,000 loan, your closing costs could be anywhere from $7,000 to $17,500. It's a significant amount, and understanding it upfront is crucial. These costs can vary based on your lender, the specific property, and even the time of year due to prorated taxes. As your Accredited Buyer Representative, I always emphasize getting a detailed Loan Estimate from your lender early on so there are no surprises.

Now for the big one: "Who pays for them in this state?" In Texas, it's a mix, and often, it's a point of negotiation between the buyer and seller.

• *What Buyers Typically Pay:**

• Lender Fees: This includes things like loan origination fees, points (if you choose to buy down your interest rate), appraisal fees, credit report fees, and flood certification.

• Title Insurance (Lender's Policy): This protects the lender if there's a problem with the title.

• Escrow Fees: Fees paid to the title company for handling the closing.

• Prepaid Items: This often includes prorated property taxes for the upcoming year, homeowner's insurance premiums, and setting up your escrow account for future tax and insurance payments.

• Recording Fees: Small fees paid to the county to record the new deed and mortgage.

• Inspection Fees: While not technically "closing costs" on the final settlement statement, these are upfront costs buyers incur.

• *What Sellers Typically Pay:**

• Real Estate Commissions: This is usually the largest closing cost for sellers, covering both the buyer's and seller's agents.

• Owner's Title Policy: This policy protects the buyer from any future claims against the property's title. In Texas, it's customary for the seller to pay this, though it can be negotiated.

• Prorated Property Taxes: The seller pays their share of property taxes up to the closing date.

• HOA Fees: Any outstanding HOA dues or transfer fees.

• Attorney Fees: If applicable, though not always required in Texas.

Here’s where my expertise comes in handy: negotiation. As a top realtor in McKinney, I’ve seen firsthand how a skilled agent can help you navigate these costs. For instance, buyers can sometimes negotiate for the seller to pay a portion of their closing costs, especially in a buyer's market or if the home has been on the market for a while. This is a common strategy for first time home buyers who might be cash-strapped after their down payment. Conversely, sellers might offer a credit for closing costs instead of making repairs. It's all about strategy and understanding the current market.

My goal, whether you're buying or selling, is to make sure you understand every line item on that closing statement. I provide comprehensive Home Buying Assistance to walk you through each step, ensuring transparency and helping you make informed decisions. Knowing what to expect financially significantly reduces stress and ensures a smoother closing.

So, if you're thinking about buying or selling in Allen, McKinney, or anywhere in the DFW metroplex, don't let closing costs intimidate you. Let's chat! I, Brandon Scribner, am always here to offer a Free Consultation to discuss your specific situation and help you strategize the best approach. Reach out today, and let's make your real estate dreams a reality, confidently and clearly!