BlogHomebuying April 28 2021

Understanding Closing Costs

How much are the costs when buying a home and what are they for?

An important part of calculating your budget when home shopping includes considering closing costs, which are additional payments you will need to either pay upfront or roll into your loan and gradually pay off.

Both buyers and sellers have closing costs. One of the most well-known closing costs is the payment of realtor commissions, which the seller pays, but buyers have associated costs as well, and these are in addition to the cost of their down payment.

What Are Closing Costs?

As part of the mortgage and home-buying process, third parties such as mortgage lenders, title companies, and real estate attorneys may perform services or do work to help process your loan and the transaction. The fees for these services account for your closing costs, and they range from tiny fees like creating copies of documents or paying a courier, to larger fees such as loan origination fees from your lender.

Some examples of the possible costs you might encounter are:

Loan Application Fee: Some (though not all) lenders charge a fee to apply for a mortgage.

Closing Fee: The fee paid to the party who handles the closing, typically a title or escrow company.

Credit Report Fee: Your lender may charge you a small fee incurred when pulling your credit reports.

Homeowners Association Transfer Fee: Some HOAs charge a fee to handle the transfer of documents between owners.

Origination Fee: This covers the lender's administrative costs to process your loan and is typically 1% of the loan amount.

How Much Will My Closing Costs Be?

In 2020, the average closing costs required to buy a home in the US were $6,087 (included taxes paid upfront) and $3,470 (excluding taxes). As a buyer, your closing costs will typically range between 3-6% of the loan amount.

Again, it's important to plan for this amount when budgeting for the amount of cash you will need to bring to close on a home.

How Will I Pay for Closing Costs?

It is possible to get a loan without closing costs. However, your closing costs could be rolled into your mortgage loan payments, so it is not necessary to pay them upfront, but they will impact your monthly payment as part of your total loan. This will make costs higher than if you paid upfront, as you will be paying interest over the life of your loan.

Although the fees can add up and even seem daunting, closing costs are a normal part of the home-buying process and your mortgage lender can walk you through estimated costs as well as different scenarios to find the best fit for you. To clear up any questions you may have, visit us at to chat with a qualified loan officer near you.

Search Results for query

October 12 2021

Should I Buy a Home with an HOA?

In the excitement of buying a new home, it can be easy to overlook the presence of a Homeowners' Association, or HOA. But an HOA can have a lot of influence over your purchase choice, including your monthly payment, the money you need to set aside for...

Read More

October 04 2021

14 Brilliant Ideas for Decorating Your Porch This Fall

Simple and inexpensive solutions for a cozy, colorful porch that says "welcome."

Read More

September 23 2021

7 Surprising Things First-Time Homebuyers Should Never Do, According to Loan Officers

Loan Officers Rachel Alcaraz and Haley Aivazian share their must-follow tips for first-time homebuyers.

Read More

September 08 2021

Expand Your Living Space with the Ultimate Patio

With some creativity, DIY spirit, and a bit of a budget, you can transform your patio into a space not only that you love, but that creates value.

Read More

September 02 2021

Mistakes Sellers Make When Showing Their Home

Here are some do's and don'ts to help show your home in the most appealing light.

Read More

August 26 2021

Organize Your Home for Back to School

With school just around the corner, now's the perfect time to whip your home into shape and get ready for smooth sailing into the school year. Here's how

Read More

August 18 2021

Home Repairs You Must Do Before You Sell

If you are getting your home ready to sell, you're better off fixing these issues now. And even if you aren't ready to sell, why not take a tour of your home with a buyer's eye, and fix those irritating repairs now so you can enjoy your home while...

Read More

August 11 2021

What is the Proposed First-Time Homebuyer Tax Credit?

Read More

August 05 2021

How to Find the Best Fixer-Upper Home

How do you know if a diamond in the rough is a good purchase? Here's how to test the waters and tell if it's okay to buy that fixer-upper home.

Read More


Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator


Affordability Calculator

affordability calculator


Refinance Calculator

refinance calculator


The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?