Buying a home is exciting! Before you buy, it’s important to understand everything involved 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 during negotiation when the seller may agree to 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! 🎉
Need Help?
Buying a house is a big decision, and everyone’s situation is different. When you finance your home at Honor, you won’t have to do any guessing when it comes to choosing a loan. We strongly recommend you reach out to our team of expert mortgage lenders, tell them your story, and let them build the right solution for you!