Whether you’re buying a luxury home for sale in Midland, TX, a house for sale in Heritage Oaks, or a home for sale in Briarwood, you’re going to have to deal with closing costs on the day you sign the dotted line.

But what are closing costs, how much are they, and why do you need to pay them?

What Are Closing Costs?

Closing costs are the fees associated with purchasing a home. They include fees your lender charges, taxes, and a handful of other costs, such as:

  • Appraisal fees
  • Attorney’s fees
  • Closing fee or escrow fee
  • Courier fees
  • Credit report charges
  • Deed-recording fees
  • Discount points
  • FHA up-front mortgage insurance premium
  • Homeowner’s insurance
  • Homeowners association transfer fees
  • Land surveys
  • Lead-based paint inspection fees
  • Loan application fees
  • Loan origination fees
  • Pest inspection fees
  • Prepaid interest
  • Prepaid property taxes
  • Private mortgage insurance
  • Taxes
  • Title insurance
  • Title search fees

Your individual closing costs may vary, based upon what you’ve already paid for and what your lender charges (every lender is a little bit different).

Who Pays Closing Costs?

Sellers or buyers can pay closing costs. Sometimes it’s a negotiation chip – as in, “I’ll buy this house from you if you pay my closing costs.” That’s because closing costs can be pretty expensive (see “How Much Are Closing Costs” below). Sometimes buyers can finance their closing costs, too, by rolling them into a mortgage loan.

Some lenders limit the amount of money sellers can pitch in for a buyer’s closing costs, but not all do.

How Much Are Closing Costs?

You can expect your closing costs to be between 2 and 5 percent of the home’s purchase price. For example, if you’re buying a $100,000 home, your closing costs could range between $2,000 and $5,000.

You’ll get a ballpark figure when your lender gives you a loan estimate that outlines how much you’ll spend on the house you’re buying. The estimate includes your closing costs, and you should receive it within the three days of your lender receiving your completed loan application.

You’ll get an exact figure when you get your closing disclosure statement. Your lender should provide a closing disclosure statement at least three days before you close the deal. You can compare the closing disclosure statement with your loan estimate, and if the prices are vastly different, it’s always a good idea to ask questions. Your lender should be able to explain why the differences appeared and let you know if there’s anything you can do about it.

Are You Buying a Home for Sale in Midland, Texas?

If you’re thinking about buying a new home in Midland or the surrounding communities, we can help.

Call our team of Midland real estate agents at 432-698-0411 to tell us what you want from your dream home. We’ll find it for you!

In the meantime, search Midland real estate listings by price or search by school district: