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Buyer education - keep this one

Closing Costs, Explained

Beyond the down payment, buyers bring funds for closing costs - a bundle of one-time fees and prepaid items that lands on the settlement table alongside the purchase price. None of it is a mystery once you know the four categories, who typically covers each one, and when each piece comes due. Exact amounts vary by price, program, and state; we build your personalized estimate before you shop.

Lender & loan fees
Title & settlement
Taxes & recording
Prepaids & escrow
Lender & loan origination, credit report, appraisal, flood certWhy: covers the work of underwriting and verifying your loan.
Title & settlement title search, lender + owner title insurance, settlement feeWhy: confirms the seller can legally convey clear title.
Taxes & recording recordation and transfer taxes, recording fees (state/county)Why: makes the sale and your loan a matter of public record.
Prepaids & escrow first-year insurance, interim interest, tax + insurance escrow cushionWhy: builds the cushion your servicer draws from later.

Every closing cost lands on one of two sides of the table. Knowing which side each item typically falls on is what lets you negotiate credits intelligently instead of guessing.

Typically paid by the buyer
  • Loan-related fees (origination, appraisal, credit)
  • Lender's title insurance and settlement fee
  • Owner's title insurance (varies by region and contract)
  • Recording fees on the deed and deed of trust
  • Prepaid interest, first-year homeowner's insurance
  • Escrow deposit for taxes and insurance
Typically paid by the seller
  • Real estate commissions (per the listing agreement)
  • Grantor / transfer taxes (varies by state and contract)
  • Property taxes owed up to the closing date
  • Existing loan payoff and lien releases
  • Negotiated seller credits toward buyer costs
  • Home warranty, if offered in the contract

Two documents that show you every dollar

Within 3 business days of application

Loan Estimate

A standardized federal form giving your first itemized look at projected closing costs and loan terms - built for comparing lenders side by side.

At least 3 business days before closing

Closing Disclosure

The final, locked-in version of the same categories - matched line by line against your Loan Estimate so nothing arrives as a surprise at the table.

At offer
Earnest money deposit

Held in escrow with your offer; credited back to you at closing.Not an extra cost - it shows the seller you are serious.

First week under contract
Inspection

Paid directly to the inspector when the inspection happens.Findings can support a repair request or price talk.

During underwriting
Appraisal

Ordered by the lender, typically paid when ordered.Confirms the home supports the loan amount.

Closing day
Everything else

One wire to the settlement agent covers the rest.Itemized on your Closing Disclosure days in advance.

Six ways buyers reduce what they bring

  • Negotiated seller credits toward closing costs
  • Lender credits (trade a slightly different rate structure)
  • Down payment assistance programs, where eligible
  • Closing later in the month (less interim interest)
  • Shopping the owner's title policy
  • Gift funds from family, documented properly
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Equal Housing Opportunity. {{lo.company}}, NMLS #{{lo.nmls}} (Company NMLS #{{compliance.companyNmls}}). This material is educational only and is not a commitment to lend, an offer of credit, or a fee quote; all loans are subject to underwriting approval. Costs described are general categories - actual items and amounts vary by transaction, loan program, and state, and appear on your official Loan Estimate and Closing Disclosure. This co-marketed material is shared by each party at its fair-market-value cost consistent with RESPA Section 8; no party pays for referrals and none are required.

Common questions

What are closing costs when buying a home?

Closing costs are one-time fees and prepaid items you bring to the settlement table on top of the down payment. They fall into four categories: lender and loan fees, title and settlement, taxes and recording, and prepaids and escrow.

What are the four categories of closing costs?

Lender and loan fees cover origination, credit report, appraisal and flood certification. Title and settlement covers the title search, lender and owner title insurance, and the settlement fee. Taxes and recording covers recordation and transfer taxes plus state and county recording fees. Prepaids and escrow covers first-year insurance, interim interest, and the tax and insurance escrow cushion.

Which documents show me every closing cost?

Two: the Loan Estimate, issued after you apply, and the Closing Disclosure, issued before settlement. Between them they itemize every dollar.

Do closing costs vary by state?

Yes. Exact amounts vary by purchase price, loan program and state, which is why a personalized estimate is built before you shop rather than after.

Who pays which closing costs, the buyer or the seller?

Every closing cost lands on one side of the table or the other. Knowing which side an item typically falls on is what lets you negotiate credits.