How much are closing costs?

Closing costs are upfront costs you are charged to get your loan and to transfer ownership of the property. Closing cost for a mortgage in the U.S. typically range from 2% to 6% of your mortgage loan amount. For example, if your mortgage loan amount is $200,000, then your closing costs typically would range from $4,000 to $12,000. Closing costs vary widely based on where you live, the type of mortgage you are seeking, and other factors. You may be able to reduce closing costs by intelligent preparation for and navigation through the loan process. You may also be able to reduce the cash you need to close (settle) by negotiating lender or seller credits.

What are closing costs?

Closing costs include all expenses that must be paid at closing (settlement). Mortgage closing costs may include:

Third party services that may be required for closing, may include, but are not limited to:

What determines how much closing costs are?

Who determines your closing costs?

Several people/organizations can have a role in determining your closing costs, including:

How can I reduce closing costs for my mortgage?

How should I pay for closing costs?

In a refinance, either the borrower or the lender may pay for closing costs. If the lender pays for closing costs they will likely increase the loan amount and/or increase the interest rate. Both scenarios result in you paying more money over time. A closing cost calculator can help you decide how to pay for closing costs.

If you buy a home you will usually pay all of the closing costs. However, subject to State law and the terms of the purchase contract, the seller may pay for some of these costs. If the seller gives you a credit towards your closing costs, you can expect to pay a higher price for your home. The lender may also offer you a credit to offset some of your closing costs. In exchange for that they may increase your loan amount and/or your interest rate.