Closing Costs

Beyond your down payment, you'll need to pay closing costs when finalizing your mortgage. These fees cover loan processing, appraisals, title searches, and more. Understanding closing costs helps you budget properly and avoid surprises at the closing table.

What are Closing Costs?

Closing costs are fees charged by lenders and third parties to process your mortgage. They typically range from 2% to 5% of your loan amount. On a $300,000 loan, that's $6,000 to $15,000 in closing costs.

Common Closing Costs

  • Origination Fee: 0.5-1% of loan for processing
  • Appraisal: $300-500 for property valuation
  • Credit Report: $30-50 for credit checks
  • Title Insurance: Protects ownership claims
  • Survey: $300-500 for property boundaries
  • Attorney Fees: Varies by state
  • Recording Fees: County recording charges
  • Prepaid Taxes: Property tax escrow
  • Prepaid Insurance: Homeowners insurance escrow

Who Pays What?

While costs can be negotiated, typically buyers pay most closing costs while sellers pay their own costs and sometimes contribute toward buyer costs. Your real estate agent can explain local customs.

Loan Estimate

Within three days of applying, lenders must provide a Loan Estimate showing estimated closing costs. Review this carefully and compare with the final Closing Disclosure. Significant increases should be explained by your lender.

Negotiating Costs

Some closing costs are negotiable. You can ask lenders to reduce or waive certain fees. You can also negotiate with sellers to contribute toward your closing costs, especially in buyer's markets.