How to Prepare for Closing Costs

You’ve saved for your down payment and budgeted for your monthly payment—but don’t forget about closing costs. These fees are often overlooked, yet they’re an important part of the homebuying process.

What Are Closing Costs?

Closing costs are the fees and expenses associated with finalizing your mortgage. They typically include:

  • Origination fees
  • Appraisal and inspection costs
  • Title insurance
  • Recording fees
  • Prepaid taxes and insurance

How Much Should You Expect?

Closing costs usually range from 2% to 5% of the loan amount. On a $250,000 home, that could be $5,000 to $12,500.

How to Prepare

  • Ask for an Estimate: Your lender will provide a Loan Estimate early in the process.
  • Shop Around for Services: Some fees, like title services, may be negotiable.
  • Consider Seller Credits: In some cases, you can negotiate for the seller to cover part of your closing costs.

Planning ahead for closing costs ensures there are no surprises when you’re ready to sign on the dotted line.