Where 2% to 5% of the purchase price actually goes — and which items you can shop for.
Closing costs typically run 2%–5% of the purchase price. Your Loan Estimate arrives within three business days of application and groups every charge into categories. Knowing which category a fee sits in tells you whether you can negotiate it.
Lender charges
Origination, underwriting, and any discount points you choose to buy the rate down. These are set by the lender and are fair game to compare across lenders.
Services you can shop for
Title insurance, settlement or escrow fees, and sometimes the survey. Your Loan Estimate includes a written list of providers, and you are allowed to choose your own. On a mid-size loan this is often the largest controllable line item.
Prepaids and escrows
Not fees at all — money that would be yours to pay anyway, collected early. Prepaid interest to month-end, the first year of homeowners insurance, and a few months of taxes and insurance to start the escrow account. Timing matters: closing late in the month reduces prepaid interest at closing.
- Appraisal — paid to an independent appraiser, not the lender
- Recording and transfer taxes — set by state and county
- Homeowners insurance — first full year, usually
- Escrow reserves — typically 2–3 months of taxes and insurance
Keep reading
- Mortgage Insurance, Explained Without the Jargon
What PMI and FHA MIP actually cost, and the specific ways each one goes away.
- Debt-to-Income Explained: The Number That Decides Your Approval
How underwriters calculate DTI, which debts count, and the fastest levers to move it before you apply.
- Financing Your First Rental: DSCR, Reserves, and Real Returns
Investment loans price differently, require more down, and judge the property as much as the borrower. Plan for all three.
- HELOC vs Cash-Out Refinance: Which Tool Fits the Job
If your first mortgage rate is low, refinancing to access equity can be the expensive option. A second lien is often better.