How to Estimate Closing Costs

Closing costs are the fees and expenses you pay when finalizing your home purchase. Understanding these costs helps you budget accurately and avoid surprises.

What Are Closing Costs?

Closing costs typically total 2-5% of the home's purchase price and include various fees paid to different parties involved in the transaction.

Common Closing Costs

• Loan origination fee: 0.5-1% of loan amount
• Appraisal fee: $300-$600
• Title insurance: $500-$2,000
• Home inspection: $300-$500
• Attorney fees: $500-$1,500
• Recording fees: $50-$500
• Property taxes: Prorated amount
• Homeowners insurance: First year premium

How to Estimate Your Costs

Use this simple formula: Home Price × 0.03 = Estimated Closing Costs

For a $300,000 home, expect approximately $9,000 in closing costs.

Ways to Reduce Closing Costs

• Shop around for lenders and compare fees
• Negotiate with the seller to pay some costs
• Ask your lender about no-closing-cost loans
• Look for first-time buyer programs

Get a Loan Estimate

Your lender must provide a Loan Estimate within 3 days of your application, which will show your estimated closing costs.