Closing costs are the fees you pay to complete your real estate transaction. They are separate from your down payment and are typically paid on closing day. Buyers can expect to pay between 2% and 5% of the home’s purchase price in closing costs.

What Do Closing Costs Include?

Closing costs can be broken down into three main categories:

1. Lender Fees: Fees charged by your mortgage lender for creating the loan.
2. Third-Party Fees: Fees for services provided by other companies, such as appraisers and title companies.
3. Prepaid Costs: Expenses you pay in advance at closing, such as property taxes and homeowners insurance.

Common Closing Costs for Buyers

Cost	Description	Estimated Cost
Loan Origination Fee	A fee charged by the lender for processing your loan application.	0.5% – 1% of loan amount
Appraisal Fee	Pays for a professional appraiser to determine the home’s value.	$300 – $600
Credit Report Fee	The cost for the lender to pull your credit reports.	$25 – $75
Title Insurance	Protects you and the lender from issues with the property’s title.	Varies by location
Home Inspection	Pays for a professional inspector to check the home’s condition.	$300 – $500
Property Taxes	You’ll typically prepay several months of property taxes at closing.	Varies by location
Homeowners Insurance	You’ll usually pay for the first year’s premium at closing.	Varies by location
Recording Fees	Fees charged by your local government to record the sale.	Varies by location

The Loan Estimate and Closing Disclosure

By law, you will receive two important documents that outline your closing costs:

• The Loan Estimate: You will receive this within three days of applying for a mortgage. It provides an itemized list of estimated closing costs.
• The Closing Disclosure: You will receive this at least three business days before your closing day. It provides the final, official list of your closing costs. Compare it carefully to your Loan Estimate to see if anything has changed.