What Are Closing Costs When Buying a Home? Here’s What to Expect 

What Are Closing Costs When Buying a Home? Here’s What to Expect 

Buying a home is exciting! Before you buy, it’s important to understand all that is entailed in purchasing a home, including closing costs. Closing costs are fees you pay at the end of the buying process to make everything official. 

They usually cost between 2% and 5% of the home’s price. Let’s break down what they include, who pays for them, and how you might be able to save money. 

What Are Closing Costs? 

Closing costs are extra fees you pay when you buy a home. They help cover things like the loan, legal work, and other steps needed to finalize the sale. These costs are not part of your down payment. 

How Much Do They Cost? 

Most buyers pay 2% to 5% of the home’s purchase price in closing costs. 

💡 For example: 
On a $250,000 home, expect to pay $5,000 to $12,500 in closing costs. 

The exact amount depends on your lender, loan type, and where you live. 

What’s Included in Closing Costs? 

Here are the most common fees you might see: 

• Loan Origination Fee 
  What your lender charges to process your loan 
  About 0.5%–1% of the loan amount 

• Appraisal Fee 
  Pays for a professional to check the home’s value 
  Usually $300–$600 

• Credit Report Fee 
  Covers the cost of checking your credit score 
  Around $25–$50 

• Title Search & Title Insurance 
  Confirms ownership and protects you from legal issues 
  Around $500–$1,000 

• Home Inspection (Optional, but smart) 
  Checks for issues like leaks or damage 
  Usually $300–$500 

• Prepaid Property Taxes & Insurance 
  You may prepay a few months into an escrow account 
  Cost varies by location and policy 

• Recording Fees 
  Paid to your local government to record the sale 
  Usually under $200 

• Attorney Fees (if required in your state) 
  Covers legal review and document prep 
  Cost varies widely 

• Private Mortgage Insurance (PMI) 
  If your down payment is under 20%, you may need to pay this upfront 
  Typically 0.5%–1% of your loan 

Who Pays Closing Costs? 

Most of the time, the buyer pays the closing costs. But there are times when negotiating the price of the home where the sellers may pay these costs. 

✅ Tip: Ask your real estate agent or lender for a full breakdown early in the process. 

Ways to Lower Your Closing Costs 

• Ask the seller to cover part of the costs 

• Shop around for lenders and service providers 

• Look into first-time homebuyer assistance programs 

• Ask about lender credits or special offers 

Closing Costs vs. Down Payment 

Your down payment goes toward the price of the home. 
Your closing costs are the extra fees to complete the purchase. 

👉 You pay both at closing, but they are not the same. 

What Happens on Closing Day? 

You’ll meet to: 

• Sign the paperwork 

• Bring your ID and a check or wire transfer for your closing costs 

• Ask any last questions 

• Get your keys and celebrate your new home! 🎉