What Are Closing Costs?
Closing Costs: Fees and charges for the loan and the purchase, paid at closing, often 2% to 5% of the price.
Closing costs are the fees for making the loan and transferring the home, paid at closing on top of your down payment. Buyers typically pay 2% to 5% of the purchase price.
Common closing costs
Lender fees
- Origination or underwriting fee
- Discount points, if you buy down the rate
- Credit report fee
Third-party fees
- Appraisal
- Title insurance and title search
- Escrow or settlement fee
- Survey, pest inspection, flood certification
Government fees
- Recording fees
- Transfer taxes, depending on the state and contract
- Homeowners insurance for the first year
- Prepaid interest
- Starting balance for your escrow account
Ways to lower them
- Compare Loan Estimates from several lenders
- Ask the seller for concessions
- Take a lender credit in exchange for a slightly higher rate
- Shop for title and other services the lender lets you choose