When budgeting for a home purchase, don't forget about closing costs. These additional fees typically range from 1.5% to 2% of your loan amount and are paid when finalizing your mortgage.

Mortgage closing costs breakdown

Types of Closing Costs

1. Lender Fees

  • Origination fees
  • Underwriting fees
  • Application fees
  • Credit report fees

2. Third-Party Fees

  • Appraisal fees
  • Title search
  • Title insurance
  • Survey fees
  • Recording fees

3. Escrow and Prepaid Items

  • Property taxes
  • Homeowners insurance
  • HOA dues (if applicable)
  • Mortgage insurance
  • Prepaid interest

4. Government Fees

  • Recording fees
  • Transfer taxes
  • Other local fees

Understanding Cost Documents

Pre-Contract Stage

  • Approximate Loan Cost Illustration (ALCI)
  • Preliminary cost estimates
  • Rate and fee worksheets

Post-Contract Stage

  • Loan Estimate
  • Initial Disclosures
  • Closing Disclosure

Ways to Save on Closing Costs

1. Lender Credits

  • Negotiate with lender
  • Compare different offers
  • Consider rate trade-offs
  • Review total cost impact

2. Seller Credits

  • Negotiate during purchase
  • Include in purchase agreement
  • Consider price implications
  • Review local market norms

3. Agent Credits

  • Discuss with your agent
  • Understand commission sharing
  • Review service agreements
  • Compare total package value

4. Rolling Costs into Loan

  • Available for refinancing
  • Increases loan amount
  • Spreads cost over loan term
  • Consider long-term impact

Important Considerations

  • Credits cannot exceed total closing costs
  • Compare total package costs
  • Consider long-term implications
  • Review all options carefully

Use our mortgage calculator to estimate your total costs, including closing costs, and our rate comparison tool to compare different lender offers.

Tips for Managing Closing Costs

  1. Get multiple quotes
  2. Review all fees carefully
  3. Negotiate when possible
  4. Plan for prepaid items
  5. Consider timing impacts

Remember: While closing costs are inevitable, there are ways to reduce their impact on your budget. Compare options carefully and consider the long-term implications of any savings strategies.

Want to explore your mortgage options? Check current rates with our rate tracker.