It may be easy for new buyers to become overwhelmed by all of the information and possible fees associated with the initial processes of buying land, but the land developers of SRC Land are here to clear the air.
No matter if you’re looking at buying land in the traditional sense or by taking advantage of seller-financing options, knowing what these fees could possibly be can help you make a more informed decision.
Don’t forget! If you’re looking for land in Harlingen, reach out to SRC Land today for more information on your buying options or possible fees.
How Much are Closing Costs for New Land Buyers in Texas?
Generally speaking, land buyers will cover around 2-5% of the entire expense of the listing, and while closing costs are not cheap, one of the largest mortgage costs happens to be the interest rate.
Throughout the time period of the loan, a couple of small percentage points can lead to a lot of money in terms of interest payments.
What are Some of the More Common Fees Associated With Buying Land for the First Time?
It’s important to know what kind of closing costs you could be charged when you buy your property. The following fees may not be applicable to your particular land purchase, so if you need more information on what may be charged should you purchase land with the help of SRC Land, contact us for more information.
With that said, here are some of the most common:
1. Loan Origination Fees – Loan origination fees are upfront charges the lender will charge to compensate for fees paid for a new loan application. These loan origination fees are often 1% of the rate of the mortgage amount and can be discussed if the risk factor of both the loan and the borrower is reasonable.
2. Discount Points – Discount points are a form of prepaid interest that can be purchased directly to lower the interest rate owed to the bank. These fees can be negotiated and taken care of by the bank.
3. Appraisal Fees – Appraisal fees pay for an appraiser to show up and identify the property’s value. Lenders typically require this and can have them range between $300 to $500 based on certain land characteristics such as size, location, and property type. Even if it isn’t mandatory, you should still get it done to ensure that it’s a fair market value and avoid overpaying.
4. Title Insurance – Title insurance is a type of indemnity insurance provided by title companies that insure against losses caused by defects in the title like liens, outstanding taxes, mortgages, and violations belonging to prior owners.
A title search is used to guarantee that the property is free of any and all obligations and that no individual has claimed the house due to unpaid dues, legal suits, and other things. Title insurance can cost up to $252, and a title search could go anywhere from $75 to $100.
5. Prepaid Costs – When a buyer acquires their loan, the lender might have them cover expenses including property taxes and homeowners or rental property insurance ahead of time. The lender will list these fees in a calculation of closing costs known as The Good Faith Estimate. This buyer is given this no more than three days after filling out a loan application.
6. Recording Fees – Texas doesn’t have any taxes or fees on the real estate transfer. Usually, states charge somewhere around $.55 for every $500 of value.
7. Survey Fee – The survey fee pays for a surveyor to appear and assess the precise boundary, location, and legal description. This fee can range from $338 and $670 depending on the size and location of the property.
8. Credit Report Fee – When your lender accesses your credit so you qualify for a loan, this cost will go roughly $50 to $60.
Additional Costs You Should Know
It may come as a shock that you still have more costs to consider when buying land for the first time; however, it’s in your best interest to do your homework and know before finalizing a purchase on your dream land.
9. Homeowners Insurance – Homeowners insurance is especially imperative for homeowners to have since it handles potential damage to your home. Your first year’s insurance is covered at closing. How much you will have to pay can differ significantly based on your home’s size, your assets, and your home address.
10. Property Taxes – Property taxes are a great source of funding for the city, county, and state governments. The taxes are evaluated from a percentage of the official rate of the property. Property taxes are frequently negotiated due to its various boards, councils, and legislatures meeting to figure out the appropriate values.
Texas’ property tax rate scored sixth highest in the country and costs the average homeowner about $1,500 per year. This is worth noting when deciding to buy a home since that bill can come out to $125 a month in property taxes alone.
11. Utilities and Maintenance Costs – A single month of utilities (heating, electricity, gas) can go up to roughly $174.
Find Land at a Fairly Low Rate With the Experienced Land Experts at SRC Land
As a potential landowner, it’s key to understand every fiscal responsibility that comes with owning a home. Knowing what costs to expect should help you come up with how much you’ll need to save for closing costs.
At SRC Land, we know how overwhelming the process of buying land can be, and that’s why our goal is to simplify it and work with you for the best turnout. While it bears repeating, these fees may not be associated with your particular purchase, so if you want more tailored information regarding the lot you are interested in, contact us as soon as possible!
