Costs
What are closing costs?
The fees and prepaid items required to close, separate from your down payment.
What are closing costs?
Closing costs
Closing costs are the fees and prepaid items required to finish the loan. Origination, appraisal, title, escrow, prepaid interest, and initial deposits for taxes and insurance typically show up.
The useful move is to read the Loan Estimate when you apply and the Closing Disclosure before you sign. The names should not be a surprise at the table.
01
Down payment reduces the loan. Closing costs finish the transaction. You need a plan for both.
02
You should see names of fees on a Loan Estimate, then again on a Closing Disclosure.
03
Some costs can be negotiated or paid by a seller. None of that should be improvised the morning of closing.
04
Prepaid taxes, insurance, and interest are real cash even when they are not “fees.”
Loan Estimate
You receive this after a complete application. It is an estimate of costs and the loan terms as disclosed. Read it. Ask about anything you do not recognize.
Closing Disclosure
You receive this before you sign. Compare it to the estimate. Some changes are allowed; some are not. Silence the morning of closing is not a review.
What usually shows up
Origination and lender fees
Charges tied to originating and underwriting the loan. Points, if you pay them, buy pricing. They are not a mystery line if you asked for them.
Third-party work
Appraisal, credit report, flood determination, and similar items. You are paying for work the file requires, not a tip jar.
Title, escrow, and recording
Title search, insurance, settlement, and recording with the county. These vary by market and property. They are still part of cash to close.
Prepaids and escrow deposits
Prepaid interest from closing to month’s end, plus seed money for the tax and insurance escrow. This is often the line people forget when they only budget “fees.”
Who can pay what
Some costs can be paid by a seller, a builder, or a lender credit, depending on the contract and the loan program. Credits have limits. They also change pricing.
Rolling costs into a refinance raises the loan amount. Paying them in cash keeps the balance lower. Both are valid. Both should be a choice, not a surprise.
From this guide
Common questions
No. Down payment reduces the loan amount. Closing costs are the fees and prepaids to finish the transaction. You need a plan for both.
Cash to close
Fees plus prepaids. Not a synonym for down payment.
Read the estimate. Read the disclosure. Then bring what you agreed to bring.
Ready when you are
The house is the point.
Whether you’re buying your first home, moving into your next one, refinancing, or exploring your options, we’re here to help you figure out the next step.