What Are Real Estate Closing Costs for Home Buyers?

When you buy a house, you need to bring more than just your down payment to the closing table. Buyer and seller closing expenses are paid in accordance with the conditions of the real estate acquisition contract, which both mortgage parties accept. Generally, the buyer’s costs consist of mortgage insurance, appraisal fees, homeowner’s insurance, and property taxes. In contrast, the seller is responsible for these costs and the commission due to the real estate agent.

Closing costs can be a little hard to understand. Before you finalize your loan, we’ll give you a rundown of everything you need to know about closing costs.

What Are Closing Costs?

Processing fees are what you pay at closing to your lender. Lenders demand these costs in exchange for creating your loan. Closing expenses include items like your home appraisal and title searches. The closing expenses you’ll have to pay to vary depending on the loan type and your residence.

Who Pays Closing Costs?

Both buyers and sellers cover closing fees. But the majority of them are usually paid by the buyer. In a negotiation known as a seller concession, you might ask a seller to contribute to your closing costs.

There are restrictions on how much a seller may contribute to closing fees. Depending on the loan type, occupancy, and down payment, sellers can only contribute up to a specific percentage of your mortgage value.

Closing Costs for Buyers

Closing expenses for buyers can be broken down into two primary categories: costs related to purchasing a home and obtaining a mortgage and costs related to home ownership. Let’s examine some of the most typical closing expenses that you might find on your disclosure.

Application Fee

For processing your loan request, some lenders impose an application fee. Depending on the lender, this cost can go up to $500. This could be a one-time charge or a down payment for future closing costs. Even if your loan application is denied, your application cost is nonrefundable.

Attorney Fees

Without an attorney, you cannot close on a mortgage in several areas. The expense of hiring a real estate lawyer to organize your closing and prepare the documentation for your title transfer is covered by attorney fees. The cost of a real estate lawyer depends on local and state prices.


Your lender will request an assessment through a third-party appraisal management company, which will send a verified appraiser to visit your home and assess its value.

To ensure the home is ready for occupants to move in, they also do some fundamental safety checks. Because they determine how much a lender will allow you to borrow for a home, appraisals are crucial.

Closing Fee

The escrow business or lawyer that performs your closing meeting receives your closing fee. In some states, every closure requires the approval of an attorney. Depending on your state and if an attorney is required to be present at your closing, these charges change.

When do I pay closing costs?

When you attend your closing meeting for the majority of home loans, you will pay your closing expenses. Your down payment and any closing expenses are paid to your lender during the closing process.


Your state’s rules, the sort of loan you have, and the value of your house all affect the particular closing fees you’ll have to pay. Depending on the terms of the selling agreement, sellers might also be responsible for covering closing costs.

Make sure you check everything you need to bring to closing in addition to your money.

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