What Is Closing Costs?
Fees paid at the closing of a real estate transaction, typically 2-5% of the loan amount.
Definition
Closing costs are all the fees beyond the down payment that you pay when finalizing a home purchase or refinance. They include lender fees (origination, application, underwriting), third-party fees (appraisal, title insurance, escrow, recording), prepaid items (property tax, homeowners insurance, mortgage interest), and points. Buyers can sometimes negotiate seller concessions to cover part of closing costs. Closing costs typically run 2% to 5% of the loan amount.
Example
A $300,000 loan with 3% closing costs means $9,000 due at closing in addition to your down payment.
Use It
Try the Mortgage Refinance CalculatorRelated Terms
Mortgage PointsUpfront fees paid to the lender to lower your interest rate, where one point equals 1% of the loan.Down PaymentThe cash you pay upfront when buying a home, separate from the mortgage loan amount.EscrowAn account held by the lender to pay your property taxes and insurance from monthly mortgage payments.