What Are Closing Costs?

You've found your Austin area dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more step--the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And it can be bewildering. As an Austin home buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remains a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed. Although many of the fees may vary by locality, here are some common fees:

Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.

Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

Prepaid Interest Fee: This fee covers the interest payment from the date you purchases the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)

Recording Fees and transfer taxes: This expense is charged by most states for recording the purchase documents and transferring ownership of the property.

Make sure you consult a real estate professional in your area to find out which fees--and how much--you will be expected to pay during the closing of you prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs.

Home Buying Testimonials
You took care of us. You didn't let us buy a house right away that would have been a mistake in the long run. You stuck with us even when the offers weren't working out and when we were being picky about what we wanted. Our price range was hard to work with, and you got us an amazing deal on a house! Thanks!
Travis and Anastasia Sullinger
Ricky is one of a kind. Buying a house is a big decision, and Ricky made us feel confident through the whole process. He is knowledgeable and a pleasure to work with. I would recommend him to anyone.
Lamar and Jill Stockton
Very knowledgeable and honest, always available, good adviser, knew the right people to fix any house problems after inspections. Ricky took on the burden of many tedious tasks. We got a great deal in an amazing area. The more we are in the house the more we love it!
Scott and Tina McLeod
You got the sellers to lower the selling price of the home and got the sellers to pay for a lot of our closing costs. That was awesome. For a while there it felt as if we were not going to get this house with all the mess that seemed to come up. But after all the changes, new lender, and you being our mediator in all this we finally got the home we wanted. Thank you so much for all your help. We look forward to you being a part of our family and helping out my family when they are ready to move into their new homes.
Robert and Julie Gallegos
You delivered on what you promised and you were accessible when I needed to contact you. I would use you again if I needed any real estate services and I will be referring you to others. You did everything I asked and more. Everything went well and it was a stress free transaction! Thank you.
Chance Lindgren
Great negotiator. You got us a great house at a great price, and amazingly responsive to our questions and concerns.
Josh and Erin Magnuson
You know you are the best Realtor in Texas and anytime I have heard something about selling or buying homes I have always recommended you, my friend. I honestly think you changed the life of my family, and that is something I will appreciate forever. Your advice was tremendously useful and now we live in the house of our dreams due to your splendid work, and the best thing is that you got it with a really decent price.  Thank you very much.
Cesar and Sofia Diaz
Agent showing us houses made herself available late night and went above and beyond to make properties available to show; follow up after purchase and advocacy on an issue not caught in the inspection. I'm sure behind the scenes communication with our mortgage lender and insurance agent was exceptional as well since there were no "bumps" in the closing process like there usually is.
Scott and Sara Postma
Ricky was just really great to work with and really helped us see the little things in each property we viewed.
Ben Snow and Chris Drake
I own my own company & I would suggest anyone who has a service business to take a lesson from Cain Realty Group. Outstanding job! Cain Realty Group's attention to detail and anticipation of my needs was exceptional, and their follow up after closing has been superb.
Paul Batrice
Start to finish, the Cain Team really took care of us. Their professionalism is unmatched! We were new to the process, so they really guided us from start to finish. They protected us in every way so that we were not taken advantage of by other service providers. They stayed on top of every aspect of the transaction and made it all happen as quickly as possible! Awesome, fun, experience. We learned so much from the experts at the Cain Team! Thanks! Highly recommend this wonderful group of professionals!
Darla and Hemang Thakkar
KodiKay was amazing! I don't think I've ever seen a person that is more on top of things than Kodikay. My wife spoke with her throughout the process but I was blown away with how good she was.
Alex and Wendy Case
Provided an upfront honest assessment of our home, and delivered high quality potential buyers.
Chris Stiner
The Cain team is beyond professional, responsive and informative. In times of uncertainty during our home buying process they were patient and made sure to get us the answers we needed. In short, they exceeded our expectations and got us into a beautiful home!
Sarah and Daniel Hill
Cain Realty Group listened to every word I said. They took into consideration my needs and feelings towards this entire process. Cain Realty Group was patient with me and let me be as indecisive as I wanted to but still gave me the best advice as to make the best decision for myself.
Deborah Mendez
We contacted my sister and she gave us three possible agents we could meet with. CRG were who we chose to work with. CRG were consummate professionals throughout every step of the way. They met us on the emotional side of wanting amazing schools and acreage so I could fulfill my dream of being a hobby farmer with chickens (not kidding). They adapted to our ever changing needs in the introductory phase of looking a property and continued to evolve with us as we went from being near the capital to closer to Dripping Springs. They were amazing! KodiKay answered all of my calls, emails, texts etc. in a way that made me feel like I was her only client. I felt truly blessed to have the opportunity to work with such a team of excellent professionals and I am picky. I am a Sales Executive and demand that I am treated the way I treat clients, and CRG met and exceeded all of my expectation. My husband and I couldn't be happier that we chose Cain Realty Group as our real estate agents. We would recommend them to anyone and would use them again in a heartbeat. This team is the BEST. A++ for being extraordinary.
Bert and Guinevere Lynn
Took the stress out of purchasing a home, and provided useful information in every step of the process.
Larry and Rachel Stubbs
Outside of the exceptional customer service, we appreciated that you took time to meet with us in the office first, prior to showing us houses or sending us listings, because it made us feel like you not merely trying to "sell" us a house. One of the things that you all said, that really resonated with us, was that you weren't going to waste our time by drive us around to a bunch of houses, you took the time to really listen to us, which set our experience with Cain Realty Group apart from other brokers that we worked with previously. We felt like you were on our side the entire time working for us (not a paycheck), which of course builds trust and loyalty....both of which you earned from us.
Thomas and Shiva Standifur
I am one that likes to research prior to selecting service providers. The Cain team was one that had a good reputation, and after a few interesting twists and turns during our journey we ended up going with them. My wife and I could not believe the level of customer service and care that this team provided. We have had experiences with other agents, but the level of knowledge and information that they provided for us was impressive. I have a feeling that this team never goes home at night, because I cannot see how they were able to keep on top of everything they were doing for us, all while working with other clients as well. It is a funny thing to say, but we feel as though we made a bunch of friends on the team, and we are a little sad to have to move on. BUT, we are now in our dream home because of them, so I guess we will be a little sad while we sit smiling in luxury :)
Brandon and Misty Poe
Always kept me notified on new MLS listings. I was always followed up with if I had questions they were answered immediately, very attentive.
Terran McTeer
Ricky and KodiKay are amazing. They found us the perfect house on our very first day of house hunting (first house we looked at) and helped us through every step of our home buying experience with grace and professionalism. I wholeheartedly recommend Cain Realty Group for all your real estate needs.
Josh and Erin Magnuson
Ricky helped us tremendously throughout the entire process of home searching and buying. He is very knowledgeable about the process, from finding homes in the Austin market, to negotiating during a multiple-offer situation. From the very beginning you can tell he wants what is best for his clients. He is very responsive and is quick to call and set up a viewing as soon as a good home comes on the market (or sometimes premarket). Also, if you like more of the personal touch, you will always be invited to join in on his monthly happy hour parties. We will definitely call Ricky if ever we sell our home in the future.
Matt Gately
Everything was done well!  Y'all stayed on top of things better than we could have asked for, and educated us as first-time home buyers without making us feel bad for asking beginner questions. You all also responded very quickly to anything we asked (at all hours of the day/night). Overall, you made a complex process (to us, at least) about as painless as you could have. We are very thankful for Cain Realty Group's help throughout!
Andrew and Jessica Buxton
The level of communication was amazing. Prior to the sell of our home, Ricky was outstanding in advising us about which updates would be worth our time and money and which were not. During the sale, obviously the building up interest in the property was effective!! Also during our purchase, Cain Realty Group was very accessible and flexible as we learned what we really wanted in our new home. And all along the way, I felt like I always had KodiKay in my corner to help with arrangements or decisions. I might need to start calling her for day-to-day decisions :)
Pablo and Jamie Berrios
Your honesty, openness and communication was awesome. You made us us feel incredibly special and you all answered any questions we had, never making us feel silly for asking.  I will definitely refer y'all whenever we know of anyone looking for a Realtor!
Jason and Nicole Oliver
First, we loved Cain Realty Group's team approach. The daily counsel and accessibility was helpful and comforting; the willingness to go the extra mile each and every day was re-assuring; and -- most importantly, the chutzpah and creativity to go out there and get the price for our home that we deserved put Cain Realty Group on a totally different level. We will forever be grateful to Ricky, KodiKay, and all the others on the team and recommend them without hesitation.
Mark and Pat Epstein
Cain Realty Group built a trusting professional relationship by always going above and beyond the expectations of a Realtor and always looking out for our best interest. All the information we needed to make a decision was given to us by our agent. Our expectations have been shattered. We are very thankful to have been referred to Ricky Cain and his team. Thank you Cain Realty Group for all of the effort and time you put into our home search and finding us a great house!
Dean and Soncy Chin