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Breakdown of common closing costs for home buyers and sellers in Dallas, Texas.

Common Closing Costs to Expect in Dallas  

May 22, 20253 min read

Common Closing Costs to Expect in Dallas

By Steven Thomas, Refind Realty 

Breakdown of common closing costs for home buyers and sellers in Dallas, Texas.

Hi, I'm Steven Thomas, a Dallas-based real estate agent with Refind Realty. If you're planning to buy a home in Dallas, it's important to understand the closing costs involved. These costs can vary, but having a clear picture can help you budget effectively and avoid surprises.

What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing a real estate transaction. In Dallas, these costs typically range from 2% to 6% of the home's purchase price for buyers . For sellers, closing costs can be higher, often between 6% and 10% of the sale price, primarily due to agent commissions .(Ramsey Solutions)

Breakdown of Common Closing Costs

For Buyers:

  • Loan Origination Fee: Charged by the lender for processing your loan, usually about 0.5% to 1.5% of the loan amount .(Houzeo)

  • Appraisal Fee: Pays for a professional appraisal of the property, typically between $300 and $600.(greysq.com)

  • Credit Report Fee: Covers the cost of pulling your credit report, ranging from $10 to $100.

  • Title Search and Title Insurance: Ensures the property's title is clear of any liens or disputes. Title insurance rates are regulated in Texas, and the cost depends on the home's price .(Herring Bank)

  • Homeowners Insurance: Required by lenders to protect against potential damages. The cost varies based on the property's value and location.

  • Escrow Fees: Fees paid to the escrow company for handling the closing process.

  • Recording Fees: Charged by the county to record the property's deed and mortgage documents.

  • Prepaid Property Taxes and Interest: Covers property taxes and mortgage interest from the closing date to the end of the month.

  • Home Inspection Fee: While optional, it's highly recommended to identify any potential issues with the property. Costs typically range from $300 to $500.

For Sellers:

  • Real Estate Agent Commissions: Usually the largest expense, typically around 6% of the sale price, split between the buyer's and seller's agents.(Kiplinger)

  • Owner's Title Insurance: Protects the buyer against potential title issues. In Texas, the seller often pays for this.(Reddit, Herring Bank)

  • Prorated Property Taxes: Sellers are responsible for property taxes up to the closing date.

  • Home Warranty (Optional): Offering a home warranty can make your property more attractive to buyers.

Tips to Manage Closing Costs

  • Shop Around: Compare fees from different lenders, title companies, and insurance providers to find the best rates.(Houzeo)

  • Negotiate: Some closing costs are negotiable. Discuss with your real estate agent about potential concessions from the seller.

  • Understand Your Loan Estimate: Lenders are required to provide a Loan Estimate outlining the expected closing costs. Review this document carefully and ask questions if anything is unclear.(Investopedia)

Final Thoughts

Understanding closing costs is crucial in the home buying or selling process. Being prepared can help you avoid unexpected expenses and ensure a smoother transaction. If you have any questions or need assistance, feel free to reach out.(Herring Bank)

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FAQs

Q: What are typical closing costs for buyers in Dallas?

A: Buyers can expect to pay between 2% and 6% of the home's purchase price in closing costs.(Ramsey Solutions)

Q: Who pays for title insurance in Texas?

A: In Texas, it's customary for the seller to pay for the owner's title insurance, but this can be negotiated.(Herring Bank)

Q: Can I negotiate closing costs?

A: Yes, some closing costs are negotiable. Discuss with your real estate agent about potential concessions.

Q: Are home inspections mandatory?

A: While not mandatory, home inspections are highly recommended to identify potential issues with the property.

Q: What is included in escrow fees?

A: Escrow fees cover the services provided by the escrow company, including handling funds and documents during the closing process.

Dallas closing costshome buying expensesreal estate fees Dallasclosing costs Texasbuyer closing costs Dallasseller closing costs Dallas
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Owned and Operated by Thomas & Thomas Financial Group, LLC

Steven J. Thomas

Steven J. Thomas has been in the financial services industry for the past 19 years and started my career as a Financial Planner for American Express Financial Advisors. I entered into banking with JP Morgan Chase as personal banker in 2003 and was promoted several times up to Small Business Specialist. I earned multiple Million Dollar Club awards and was ranked in the top 5 Small Business Specialist before I branched out in 2005 to start my own Financial Management Company. I ran a successful company before family circumstances lead me to Wachovia Bank in 2008 where I worked as a Senior Financial Specialist. As a Sr. Financial Specialist; I was responsible for the P & L and revenue growth of my banking center. The elimination of my role thru a bank merger lead me to BBVA Compass. I have held various leadership roles at BBVA Compass including Personal Relationship Manager, Branch Retail Executive, Workplace Solutions VP, and his current role as a Retail Manager. As the Regional Workplace Solutions VP, I was responsible for the strategic, tactical, and execution of Partnership Banking relationships, promotion and activity with corporate and non-profit companies in my footprint. I was responsible for the acquisition production for three districts, which includes 51 banking centers and over 300 employees. In May of 2014, I joined the team at Refind Realty and became one of the managing partners in mid-2015.

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I used this realtor and it was a great experience. He was patient and very helpful with our journey. He also helped us find a great lender with little hassle on the process, also got us approved for well above the market of our original home so we were able to get more house with a lower mortgage rate. So to anyone who is interested in buying a home take my advice give Steven a call. It’s worth it 😁

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Ask Us Anything

Frequently Asked Questions

Why do you need a Realtor?

When buying or selling a home, there are so many options…which can also present a lot of obstacles. Laws change, forms change, and practices change all the time in the real estate industry. Because it’s our job to stay on top of those things, hiring a realtor reduces risk, and can also save you a lot of money in the long run.

When you work with me as your Realtor, you’re getting an expert who knows the area; knows how to skillfully guide your experience as a seller or buyer; can easily spot the difference between a good deal and a great deal. My job is to translate your dream into a real estate reality, and I work hard to earn and keep my business. This also means earning your trust: When you work with me, you’ll be working with a realtor who looks out for your best interests and is invested in your goals.

Which loan should you choose?

There are two different types of loans conventional loans and government-backed loans. The main difference is who insures these loans:

1 - Government-backed loans (FHA, VA and USDA):

(a) - Are, unsurprisingly, backed by the government.

(b) - Include FHA loans, VA loans, and USDA loans.

(c) - Make up less than 40 percent of the home loans generated in the U.S. each year.

2 - Conventional loans

(a) - Are not backed by the government.

(b) - Include conforming and non-conforming loans (such as jumbo loans).

(c) - Make up more than 60 percent of the loans generated in the U.S. each year.

What is the difference between FHA, VA and USDA loans?

1 - FHA LOANS:

FHA loans, which are insured by the Federal Housing Administration, are typically designed to meet the needs of first-time homebuyers with low or moderate incomes. FHA loans can be approved with a down payment of as little as 3.5 percent and a credit score as low as 580.

FHA loans are often called “helper loans,” because they give a leg up to potential borrowers who may not be able to secure one otherwise. For this reason, FHA loans have maximum lending limits, which are determined based on housing values for the county where the for-sale home is located.

Because the agency is taking on more risk by insuring FHA loans, the borrower is expected to pay mortgage insurance both at the time of closing and on a monthly basis, and the property must be owner-occupied.

2 - VA LOANS:

VA loans are backed by the Department of Veterans Affairs and they are guaranteed to qualified veterans and active-duty personnel and their spouses. VA loans can be approved with 100 percent financing, meaning VA borrowers are not required to make a down payment.

Unlike FHA loans, borrowers do not have to pay mortgage insurance on VA loans.

3 - USDA LOANS:

You may also hear about USDA loans, which are backed by the United States Department of Agriculture mortgage program. USDA loans are intended to support homeowners who purchase homes in rural and some suburban areas. USDA loans do not require a down payment and may offer lower interest rates; borrowers may have to pay a small mortgage insurance premium in order to offset the lender’s risk.

What’s a conventional loan? Understanding what it means to be conforming and non-conforming

Buyers who have a more established credit history and a larger down payment may prefer to apply for a conventional loan. These loans may offer a lower interest rate and only require the home buyer to purchase monthly mortgage insurance while the loan-to-value ratio is above a certain percentage, so a conventional loan borrower can typically save money in the long run.

Conventional loans are divided into two types: Conforming loans and non-conforming loans.

1 - CONFORMING LOANS:

Conforming loans are those that meet (or conform to) predetermined standards set by Fannie Mae and Freddie Mac — two government-sponsored institutions that buy and sell mortgages on the secondary market. By selling the loans to "Fannie and Freddie," lenders can free up their capital and return to issue more mortgages than if they had to personally back every loan that they approve.

The main standard for conforming loans is that the amount borrowed must be under a certain amount; in Alaska, a single-family home loan must be under $647,200 in order to be considered conforming.

Properties with more than one unit have higher limits.

2 - NON-CONFORMING (JUMBO) LOANS:

But what happens if a borrower wants to borrow more than the Freddie- and Fannie-approved loan amount? In this case, they would have to apply for a “jumbo loan,” which is the most common type of non-conforming loan.

Because the lender cannot resell the jumbo loan (or any non-conforming loan) to Freddie Mac or Fannie Mae, jumbo loans are considered to be riskier than a conforming loan. To protect against this risk, the bank will typically require a higher down payment; the interest rate on a jumbo loan may also be higher than if the same borrower applied for a conforming loan.

What kind of rate should you choose?

Rate types: Fixed-rate vs. adjustable-rate mortgages.

In addition to the loan type you choose, you’ll also have to determine if you want a fixed-rate mortgage or an adjustable-rate mortgage (ARM). A fixed-rate mortgage has an interest rate that does not change for the life of the loan, so it provides predictable monthly payments of principal and interest.

An adjustable-rate mortgage typically offers an initial introductory period with a low-interest rate. Once this period is over, the interest rate adjusts periodically, based on the market index. The initial interest rate on an ARM can sometimes be locked in for different periods, such as one, three, five, seven, or 10 years. Once the introductory period is over, the interest rate typically readjusts annually.

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