What Are Closing Costs and How Much Should You Expect to Pay?
Closing costs catch many homebuyers off guard. Here's exactly what's included, who pays what, and how to reduce them.
General information, not professional advice — see terms of use.
Closing costs are fees paid at closing beyond the down payment, typically totaling 2–5% of the loan amount.
On a $300,000 loan, expect $6,000–$15,000 in closing costs.
Buyer's closing costs typically include:
- Loan origination fee: 0.5–1% of loan amount
- Appraisal: $400–$700
- Home inspection: $300–$500
- Title insurance: $700–$1,500
- Attorney fees (required in some states): $500–$1,500
- Prepaid interest, property tax escrow, and first year's insurance
- Recording fees: $50–$200
Seller's closing costs:
- Real estate agent commissions: Typically 5–6% total (changing post-NAR settlement)
- Transfer taxes and attorney fees
How to reduce closing costs:
- Compare Loan Estimates from at least 3 lenders
- Ask for seller concessions
- Close at end of month to minimize prepaid interest
- Shop title insurance independently
Follow-up questions
Can closing costs be rolled into the mortgage?
Some lenders offer no-closing-cost mortgages where costs are rolled into the loan balance or offset by a slightly higher rate. This makes sense if you plan to sell or refinance within a few years. Over a 30-year loan, paying upfront is almost always cheaper.
What is title insurance and is it required?
Title insurance protects against defects in the property's title — past liens, ownership disputes, or fraud. Lender's title insurance is required by virtually all lenders. Owner's title insurance (protecting you) is optional but highly recommended — a one-time premium of $500–$1,500 that protects you as long as you own the home.
Who pays closing costs — buyer or seller?
Both parties pay closing costs. Buyers typically pay 2–5% of the loan amount. Sellers typically pay the real estate commissions (5–6% of sale price) plus transfer taxes. In a buyer's market, sellers may agree to pay some of the buyer's closing costs as a concession.
More real estate answers
This page is general information, not professional advice, and it may not reflect the latest rules where you live. For your own situation, talk to a qualified adviser. Spotted an error? Email per@upperia.se and we will fix it.