Question 1

What are closing costs?

Accepted Answer

Closing costs are fees and expenses you pay when finalizing a real estate transaction. They typically range from 2-5% of the home's purchase price for buyers and include lender fees, third-party services, government fees, and prepaid items like property taxes and insurance.

Question 2

Who pays closing costs?

Accepted Answer

Both buyers and sellers pay closing costs, but different ones. Buyers typically pay lender fees, appraisal, inspection, title insurance, and prepaid items. Sellers usually pay real estate commissions and transfer taxes. Some costs can be negotiated.

Question 3

Can closing costs be rolled into the mortgage?

Accepted Answer

Some closing costs like FHA upfront MIP and VA funding fees can be rolled into your loan amount. However, most closing costs must be paid upfront at closing. Some lenders offer 'no closing cost' loans where they cover costs in exchange for a higher interest rate.

Question 4

How much should I budget for closing costs?

Accepted Answer

Budget 2-5% of the home's purchase price for closing costs. For a $400,000 home, expect $8,000-$20,000. The exact amount varies by location, loan type, and lender. Your Loan Estimate will show exact costs within 3 days of applying.

Question 5

What is a Loan Estimate?

Accepted Answer

A Loan Estimate is a standardized form lenders must provide within 3 business days of your application. It shows your estimated interest rate, monthly payment, and closing costs. Use it to compare offers from different lenders.

Question 6

Can I negotiate closing costs?

Accepted Answer

Yes! You can shop around for services like title insurance and home inspection. You can also ask the seller to pay some costs (seller concessions) or negotiate with your lender to reduce or waive certain fees.

Closing Cost Calculator

Total Cash Needed

Detailed Breakdown

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Understanding Closing Costs

Lender Fees

Third-Party Fees

Government Fees

Prepaid Items

Tips to Reduce Closing Costs

Frequently Asked Questions