What Are Closing Costs?
Closing costs are the fees and expenses buyers and sellers pay when finalizing a home sale. These costs typically range from 2% to 5% of the loan amount.
Typical Closing Costs for Buyers
| Fee | Estimated Cost |
|---|---|
| Loan Origination Fee | 0.5% - 1% of the loan |
| Appraisal Fee | $300 - $600 |
| Title Insurance | $500 - $1,500 |
| Home Inspection | $300 - $500 |
| Escrow Fees | $500 - $2,000 |
Typical Closing Costs for Sellers
Sellers typically pay real estate commissions and some transfer taxes or title fees.
- 📑 Realtor Commissions – 5-6% of the sale price.
- 📜 Title Transfer Fees – Varies by state.
- 🏡 Outstanding HOA Fees & Property Taxes – Must be paid at closing.
How to Reduce Closing Costs
Buyers and sellers can negotiate or shop around for better rates:
- 📉 Ask the seller to cover some costs – Known as seller concessions.
- 🏦 Compare lender fees – Different lenders charge different closing costs.
- 📝 Request lender credits – Some lenders offer lower upfront fees for higher interest rates.
Are Closing Costs Tax Deductible?
Some closing costs, such as property taxes and mortgage interest, may be tax-deductible.
The Bottom Line
Closing costs are an important part of buying or selling a home— planning for them ensures no last-minute surprises.
“Understanding closing costs can help you budget better and negotiate smarter when buying a home.”
— Sarah Thompson, Real Estate Advisor
Frequently Asked Questions
Can I roll closing costs into my mortgage?
Yes, some lenders allow closing costs to be financed into the loan.
Who pays closing costs?
Both buyers and sellers pay different closing costs—some are negotiable.
Can I negotiate closing costs?
Yes, you can negotiate some lender fees and seller concessions.