Closing costs
Below is a simple breakdown of the costs associated with a mortgage. Most of these fee’s are based on the price of the house, we just used $500k because it’s a round number. More details on how the prices are determined and how you can calculate them yourself are listed at the bottom.
$500,000 House - $475,000 Loan
Closing on May 15
Down payment
Minimum of 3% for conventional or 3.5% for FHA. In this example, the buyer is putting down 5%.
$25,000
Origination fees
These are the fees charged to pay the people working on your loan – the underwriter and processor.
$1,055
$850
Points
This is the amount of money you pay to bring your interest rate down. In this example we’ll say the borrower bought one point, which is one percent of the loan amount. You can get an idea of how points and pricing work here.
$4,750
Service fees
These are the fees that you pay for third party services associated with the loan.
$800 appraisal
$80 credit report
$90 tax service
$60 attorney doc prep
$90 tax service
Title fees
These are fees charged by the title company for their services.
$500 settlement fee
$50 doc prep
$60 electronic recording fee
$200 endorsements – these change from home to home based on your location and title policy requirements
$2,940 lenders title policy – you can see how this fee is calculated at the bottom of the page or use a policy calculator located on most title company websites
$4.50 Texas title guarantee
$160 County recording fees
Pre-paid items
Fees that need to be paid in advance. Interest for each day after closing through the end of the month and one year of homeowners insurance.
$640 Daily interest – interest for every day from closing through the end of the month. There are 17 days from May 15 through May 31st (17 x $37.65 = 640).
$1,200 Homeowners insurance (estimated .65% of purchase price)
Reserves (escrow)
Fees that need to be paid in advance.
– Three (3) months homeowners insurance
– Three (3) months property taxes
*Some of this will be credited back
$300 Three (3) months homeowners insurance
$3,125 Three (3) months of property taxes (estimated 2.5% tax rate)
Total Costs
$500,000 Purchase price
$16,104 closing costs
Credits
$500,000 Sale
+$16,104 Closing Costs
$516,104 Total
– $5,500 Earnest Money Deposit & Option
– $2,940 (if seller is paying for title policy)
– $5,000 Seller Credit (if negotiated with seller)
– $475,000 Loan
$27,664
Cash to Close
$27,664
Property taxes
In the example above, we used 2.5%. However, you can see exactly how much property taxes will cost by visiting the central appraisal district website and searching the property address. Use the MARKET RATE indicated on the site. For this example the house is for sale for $500,000 but the market rate is $346,212. Add up all of the tax rate line items (1.0617+.541+.357365+.111814+.104800=2.176679) take the tax rate of 2.176679% x $346,212 = 7,535.92 / 12 = $627.99 per month
Lender title policy
Take the price of the house, $500,000 and subtract $100,000 = $400,000 then multiply it by 0.00527 = $2,108 and add $832 = $2,940
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