Understanding Closing Costs

Closing costs add 2–5% to your purchase price — and they surprise buyers who budgeted only for the down payment. Understanding what you're paying for helps you budget and negotiate.

Common closing costs

• ▸Lender fees: origination fee (0.5–1% of loan), appraisal ($300–500), credit report ($25–50).
• ▸Third-party fees: title insurance and search, attorney fees where required, home inspection.
• ▸Prepaid items: property taxes (prorated), homeowner's insurance, mortgage interest from closing to month-end.

How to reduce closing costs

• ▸Shop lenders — compare Loan Estimates from at least three; origination charges vary widely.
• ▸Negotiate with the seller — ask for seller credits toward closing costs (common, especially in buyer's markets).
• ▸Close near month-end — reduces prepaid interest for the partial month.
• ▸Ask about no-closing-cost loans — the lender covers fees in exchange for a slightly higher rate. Worth it if you're cash-constrained.
• ▸Shop your own title insurance — you're entitled to choose the provider; it's often half the price of the lender's affiliated company.

The honest number

The Cash-to-Close tool adds every cost — title, taxes, insurance, origination — for your specific state and loan, so the wire amount at the closing table is never a surprise. The number it shows is the number you'll bring.

Watch the page-3 total

Your Loan Estimate's page 3 shows "Cash to Close" — the total you'll bring to closing. Compare this across lenders, not just the rate. A lender with a lower rate but $3K more in fees may be the worse deal.