Closing Costs
What Are Closing Costs?
Closing costs are the fees and expenses paid at the end of a real estate transaction.
They typically range from 2% to 5% of the home’s purchase price.
Closing costs may include:
- Lender origination fees
- Appraisal fees
- Title insurance
- Recording fees
- Escrow deposits
- Prepaid taxes and insurance
Why It Matters in a Mortgage
Closing costs affect:
- Cash required at closing
- Total upfront investment
- Loan affordability
Some costs are lender-controlled. Others are third-party fees.
The Consumer Financial Protection Bureau requires transparent disclosure through the Loan Estimate and Closing Disclosure forms.
Borrowers may negotiate certain fees or request seller concessions.
How It Works
Before closing, borrowers receive an estimate of costs.
At closing, final numbers are confirmed and paid.
Some costs can be rolled into the loan, depending on structure.
Closing Costs vs. Down Payment
Closing Costs → Transaction-related fees
Down Payment → Equity contribution toward purchase
They are separate obligations.
FAQs About Closing Costs
Can closing costs be financed?
Sometimes.
Are closing costs tax deductible?
Some may be, depending on tax rules.
Can sellers pay closing costs?
Yes, through negotiated concessions.
Related Terms
