Understanding Closing Costs: What You Will Pay and How to Save

What Are Closing Costs?

Closing costs are the fees and expenses paid to finalize a home purchase or refinance. On a $350,000 home, expect $7,000-$17,500 in closing costs (2-5%). These are paid at the closing table in addition to your down payment.

Common Closing Cost Breakdown

• Loan Origination Fee: 0.5-1% of loan amount ($1,750-$3,500)
• Appraisal Fee: $400-$600
• Credit Report: $25-$50
• Title Search and Insurance: $500-$3,500
• Attorney/Settlement Fees: $500-$1,500
• Recording Fees: $50-$250
• Transfer Taxes: Varies by state (0-2% of sale price)
• Prepaid Interest: Daily interest from closing to first payment
• Escrow Deposits: 2-6 months of taxes and insurance
• Home Inspection: $300-$500 (optional but recommended)
• Survey: $300-$800 (if required)

How to Reduce Closing Costs

Negotiate seller concessions: Ask the seller to cover 2-6% of closing costs (limits vary by loan type). In buyer's markets, this is common.

Shop lender fees: Origination fees, processing fees, and underwriting fees vary significantly. Get Loan Estimates from 3+ lenders and compare Section A fees.

Ask about lender credits: Accept a slightly higher rate in exchange for the lender covering some closing costs. This makes sense if you plan to refinance or sell within a few years.

Close at end of month: This minimizes prepaid interest charges.