Closing costs on a house are the fees and expenses, beyond the down payment, that buyers and sellers pay to complete a real estate transaction. These costs include various charges such as loan origination fees, appraisal fees, title insurance, attorney fees, property taxes, escrow fees, and recording fees
Typical Amount of Closing Costs
- For buyers, closing costs usually range from about 2% to 6% of the home's purchase price or loan amount. For example, on a $400,000 home, closing costs might range from $8,000 to $24,000
- Sellers typically pay closing costs around 3% to 4% of the sale price , which can include real estate agent commissions and transfer taxes. In some cases, total seller closing costs can reach 8% to 10% of the sale price due to commissions and other fees
Who Pays What?
- Buyers generally cover lender-related fees, prepaid expenses like insurance and property taxes, appraisal fees, and title insurance.
- Sellers usually pay real estate agent commissions and may contribute to some buyer fees as negotiated, along with transfer taxes and other seller-specific fees
Additional Notes
- Closing costs vary by location and property value.
- Some fees are negotiable, such as lender origination fees or certain service charges, while others like government fees and taxes are fixed
- By law, buyers must receive a closing disclosure detailing all costs at least three business days before closing
In summary, closing costs are the additional fees paid to finalize a home purchase or sale, typically ranging from 2% to 6% for buyers and around 3% to 4% or more for sellers, depending on the specifics of the transaction and location.
