If you’ve heard people vent frustration with the process of buying a home, you’ve likely heard complaints about unexpected costs at closing. Let’s unpack what you should expect so you’re not surprised, too.
Closing costs can vary widely by location and your home’s purchase price. Costs are split between the buyer and the seller, but the buyer cover the lion’s share. Buyers can generally expect closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, a buyer can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)
You can try to predict closing costs with calculators like Nerdwallet’s, which lets you plug in your mortgage details to get a rough estimate of what your costs will be.
Closing fees often include (but are not limited to):
- Commission for the buyer’s agent and seller’s agent
- A loan application fee
- An origination fee, which lenders charge for processing your loan
- The appraisal fee
- A fee for pulling your credit report
- An underwriting fee, which covers the lender’s costs of researching whether to approve you for the loan
- A title search fee
- Property taxes, which are due within 60 days of the purchase
- A recording fee for filing a public land record with the courthouse
These fees are a bummer. The bright side: Almost all of them are one-time deals.
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