Closing costs are the fees required to finalize your loan and transfer the home. They are separate from your down payment and usually land somewhere around 2% to 5% of the loan amount.
Common closing costs
- Loan origination and underwriting fees
- Appraisal and credit report fees
- Title search, title insurance, and settlement fees
- Prepaid property taxes and homeowners insurance
- Recording fees and transfer taxes
Who pays what
Buyers typically cover most closing costs, but the seller can agree to pay a portion through what is called a seller concession. In a buyer-friendly market, that can be a powerful negotiating tool.
Ways to reduce them
You can negotiate seller credits, compare lender fees, and in some cases roll certain costs into the loan. Lender credits can also lower upfront costs in exchange for a slightly higher rate.
Ask for a Loan Estimate early. It breaks down every fee so you can compare lenders apples to apples.