Definition
Think of closing costs as the "price of doing business" in real estate—they typically run 2-5% of the purchase price and cover appraisals, title insurance, inspections, lawyer fees, and other services needed to finalize your purchase.
Where you’ll meet it
Am I ready? Money, credit, and what it really costs
See it in Buying my first home · Step 1About this term
Closing costs typically range from 2-5% of the purchase price and are paid by the buyer, though some can be negotiated between buyer and seller. These costs cover services necessary to finalize the transaction, including lender fees, title services, government recording charges, and property-related inspections. The Good Faith Estimate (now called Loan Estimate under TRID regulations) must be provided within 3 days of loan application to help buyers understand their costs.
Pro Tip
Shop around for title insurance and compare lender fees—these are often negotiable and can significantly affect your closing costs.
Example
On a $300,000 home purchase, closing costs of $7,500-$15,000 might include: appraisal ($400), title insurance ($800), attorney fees ($500), loan origination fee ($3,000), property taxes prorated ($1,200), and other third-party fees ($2,100-$8,200).