Financing
Last updated: Jan 20255 min readUnderstanding Closing Costs
What fees to expect and how to reduce them
Closing costs can add 2-5% to your home purchase price. Understanding what you're paying for can help you budget and negotiate.
1Common Closing Costs
Expect to pay for:
Lender fees:
Third-party fees:
Prepaid items:
Lender fees:
- Origination fee (0.5-1% of loan)
- Appraisal fee ($300-500)
- Credit report fee ($25-50)
Third-party fees:
- Title insurance and search
- Attorney fees (if required)
- Home inspection
Prepaid items:
- Property taxes (prorated)
- Homeowner's insurance
- Mortgage interest
2How to Reduce Closing Costs
Strategies to save:
- Shop around: Compare Loan Estimates from multiple lenders
- Negotiate with sellers: Ask for seller credits
- Close at end of month: Reduces prepaid interest
- Ask about no-closing-cost loans: Higher rate, but no upfront fees
- Challenge junk fees: Question any fee that seems unclear
Pro Tips
- Review your Loan Estimate carefully within 3 days of application
- Compare the Closing Disclosure to your Loan Estimate
- Wire fraud is real—verify all wiring instructions by phone
- Bring a cashier's check or arrange wire transfer in advance