What are typical mortgage closing costs?

Typical closing costs range from 2-5% of the loan amount and include loan origination fees, appraisal fees, title insurance, escrow deposits, and various government recording fees. The exact amount varies by location and loan type.

Which closing costs are negotiable?

Many closing costs are negotiable, including loan origination fees, application fees, and some third-party fees. Title insurance and escrow fees may also be negotiable. However, government fees and taxes are typically non-negotiable.

How can I reduce my closing costs?

You can reduce closing costs by shopping around for lenders, negotiating fees, asking for lender credits, timing your closing for the end of the month, and looking for first-time homebuyer programs that offer closing cost assistance.

Mortgage Closing Costs Explained

Financial Education Series

June 14, 2025

Understanding All Costs of Buying a Home

Closing costs can add thousands to your home purchase. Understanding what these costs are, which ones are negotiable, and how to reduce them can save you significant money.

Why This Matters

Closing costs typically range from 2-5% of your loan amount. On a $300,000 home, that's $6,000-$15,000 in additional costs. Understanding these fees helps you budget accurately and potentially save thousands.

Common Closing Costs

Loan-Related Fees

Origination Fees

Typically 0.5-1% of the loan amount. Covers the lender's costs for processing your loan.

Application Fees

Usually $300-$500. Covers initial processing and credit checks.

Points

Optional fees to lower your interest rate. Each point costs 1% of the loan amount.

Third-Party Fees

Appraisal

$300-$500. Required to determine the home's value.

Title Insurance

$1,000-$2,000. Protects against title defects and claims.

Escrow Fees

$500-$1,000. Covers the cost of the escrow company's services.

Negotiable vs. Non-Negotiable Fees

Fee Categories

Negotiable Fees

Loan origination fees

Application fees

Title insurance (shop around)

Escrow fees

Non-Negotiable Fees

Government recording fees

Property taxes

Appraisal fees

Credit report fees

Cost Reduction Strategies

Shopping Strategies

Compare Lenders

Get quotes from multiple lenders and compare their closing cost estimates. Look for lenders offering credits or reduced fees.

Shop Title Insurance

Title insurance rates can vary significantly. Get quotes from multiple providers to find the best rate.

Ask for Credits

Lenders may offer credits to cover some closing costs, especially if you're a strong borrower or if they're trying to win your business.

Timing Strategies

End-of-Month Closing

Closing at the end of the month can reduce the amount of prepaid interest you need to pay at closing.

First-Time Buyer Programs

Look for programs that offer closing cost assistance for first-time homebuyers in your area.

Seller Concessions

In some markets, you can negotiate for the seller to pay a portion of your closing costs.

Next Steps

Ready to calculate your potential closing costs? Use ourmortgage calculatorsto estimate your total costs, or learn more aboutdifferent mortgage typesto find the best loan for your situation.

This content is educational in nature and updated as of 2025. We aim to relay factual financial information, similar to how a newspaper would report market data. For complete information about our services, please review our Terms of Service.