We all have the fear of “closing costs.”  Especially when you haven’t purchased a home before.  For some people, the fear is strong enough to keep them from realizing the true joys of homeownership.  Don’t be afraid any longer.

Closing costs for a typical home purchase average in Texas to be about 4.5% of your sales price.   Depending on your credit score and payment history you might be able to roll in 3% to 6% into your main loan amount to cover the closing costs.  Keep in mind this figure of 4.5% for closing costs includes your prepaids. 14 months worth of home owner’s insurance fees, 2 months of property taxes, and 14 days of interest. 

Let’s do the math.
Purchase Price $150,000
Closing Costs = $6,750

You can ask the seller to pay it, as long as your lender approves.  Worst case, the seller can 3% ($4,500) which leaves $2,250.  This is a much more manageable number.  Especially if you break it down to the day.  You would simply need to save $6.25 per day out of your current spending to cover the closing costs.  Cut out the Starbucks coffee and you have got it made!  Remember, in many cases, the seller can pay all of your closing costs, so you can keep your Starbucks and have your new home too!  If the seller won’t pay the closing costs at the sales price of $150,000, then you can roll the cost in by increasing the sales price.  Remember to pay close attention to the requirements of the lender and make sure that your new home will appraise for the increased purchase price.  It won’t do you any good to roll them in, if the appraisal will not support the price.  You will have to come up with difference.

Besides the prepaids for your taxes and homeowners insurance, closing costs include the lender and title company fees to prepare the paperwork and process your new home loan.  In many cases these fees will vary from lender to lender and title company to title company.  It pays to have an expert on your team to help negotiate the best deal not only on your home price, but also the closing costs!

Article by Teresa Robinson, Owner/Buyer Specialist, North Texas Home Finders
Get a Buyer Specialist and rest easy! The builder pays our service charge from their advertising budget which is built into every home they sell. Since these fees do not come out of the home construction budget, you cannot negotiate one penny of a better deal alone.  Visit www.northtexashomefinders.com for more information.