Buying or Selling a Home? Plan for Closing Costs

Saving for a down payment on a home purchase? You’d better carve some money from your savings to cover closing costs as well.

Realtor.com identifies closing costs as fees paid to third parties that help facilitate the sale of a home, and they vary by location and the time of year that the property is bought and sold. As a rule, you can count on spending at least two percent of the home’s purchase price in added closing costs. It could easily hit five percent, possibly a percentage point or two more. So, on a $250,000 home, your closing costs could range from $5,000 to $17,500. With such a wide range, you’ll definitely want to discuss this with your realtor and try to come up with a ballpark figure.

Closing costs will be assigned between the buyer and seller, but buyers shoulder the lion's share primarily because of the costs associated with processing the mortgage. Some closing costs are required to be paid before the home is officially bought, but most fees are paid when you close on the home and the keys exchange hands.

Here are some of the fees homebuyers should brace themselves to pay:

Here are the closing costs that sellers are typically responsible for:

Remember, closing fees can vary between counties in Texas. As you move along in the homebuying process, get with your realtor and mortgage loan officer to refine original estimates for closing costs. Federal laws require home lenders to send buyers a closing disclosure that outline closing costs at least three days before closing (sellers should receive similar documents from their realtor outlining their own costs).

The Consumer Financial Protection Bureau encourages homebuyers to understand 100 percent of what they are signing at closing, and the CFBP offers a closing checklist that can be very helpful during the process.

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