Despite the bust in oil prices in 2014 and 2015, the housing market in Texas remains strong, with prices continuing to climb from their 2012 lows. Texas has a diverse economy that may stem the adverse effects of lower oil production, and its low real estate values relative to California and other western states still attract businesses and workers. Texas home values continue to climb due to increasing demand that has tightened housing inventories across the state. The demand for housing has also pushed up the cost of home purchases at closing time. Although average closing costs in Texas are nowhere near the highest in the country, they exceeded the national average as of May 2016.

Average Closing Costs in Texas

In Texas, the average origination fees charged by lenders total $1,031. The average fees charged by third parties involved in the transaction are $833, which brings the total average closing costs to $1,864. This is just above the national average of $1,847. Utah, Ohio, Idaho and Wyoming have the lowest average closing costs, which are all below $1,700. Hawaii, Connecticut and New Jersey have the highest closing costs, at more than $2,000 each.

On average, borrowers pay the lender $38 for document preparation, $1,084 for the origination fee and $81 for tax services. Third-party charges include $421 for an appraisal, $528 for closing or settlement, $21 for credit reports, $10 for flood certification, $125 for pest inspections, $100 for postage or couriers and $379 for a survey. Title insurance fees are not included in these averages because lenders have difficulty in estimating them, but they can add as much as $1,000 to the total closing costs. Homebuyers must also pay out of pocket to fund impound accounts for property taxes and homeowners insurance.

What Goes Into Closing Costs

In Texas, closing costs can vary based on the lender, market and size and type of property. The following closing costs are fairly typical for most home sales in Texas.

Loan Origination Fee: This is an all-inclusive fee that covers the lender’s loan processing costs, including origination, underwriting, documentation and funding. It is often expressed as a percent of the loan amount, around 1%. It is typically the largest single cost in closing and it is often negotiable in a buyer’s market. Some lenders waive the fee altogether in exchange for a slightly higher interest rate.

Appraisal Fee: Lenders need to be satisfied that the property value matches or exceeds the sale price on which the loan is based, and is reasonable in comparison to other properties in the area. They order an independent property appraisal that is paid as part of closing costs.

Title Insurance: In Texas, buyers buy title insurance on the lender to protect their investment against title defects. The seller is required to purchase title insurance on the buyer to guarantee a clear title. Additional title fees can include the cost of a title search, recording, notary and couriers.

Survey: Depending on the type and size of property, lenders in Texas many require a survey to verify the integrity of the property lines.

Settlement/Closing fees: Attorneys are not required at the time of settlement in Texas, as the title company handles most of the legal aspects of closing the sale.

Inspections: Although they are not required for conventional loans, a lender may request a pest inspection if there is any indication of a possible problem in the appraisal. If a buyer requests a home inspection, the cost is paid directly by the buyer.

Seller’s Closing Costs

Sellers are responsible for their own set of closing costs, which can amount to about 1% of the sale price. Sellers’ costs vary widely because some may not be required and others, such as sales commissions, can be negotiated. Costs can include fees paid to bring the property within code compliance, home inspections, a home warranty, sales commissions, property taxes owed, title insurance and escrow fees.

Virginia (VA): Average Closing Costs

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