When budgeting for a home purchase, many buyers focus on the down payment and forget about closing costs. These fees typically range from 2% to 5% of the loan amount and are due at the closing table. Here's what you need to know.
Common Closing Costs
- Loan Origination Fee: 0.5-1% of the loan amount, charged by the lender for processing your loan
- Appraisal Fee: $300-$600 for a professional assessment of the home's value
- Title Insurance: $500-$2,000 to protect against ownership disputes
- Escrow Fees: $500-$2,000 paid to the escrow company managing the transaction
- Recording Fees: $50-$250 charged by the county to record the deed
- Prepaid Items: Homeowners insurance, property taxes, and prepaid interest
- Home Inspection: $300-$500 (typically paid before closing)
How to Reduce Closing Costs
There are several strategies to minimize your out-of-pocket closing expenses:
- Negotiate seller concessions — the seller may agree to cover some closing costs
- Shop around and compare lender fees (we encourage it!)
- Ask about lender credits in exchange for a slightly higher rate
- Look into closing cost assistance programs in your area
- Close at the end of the month to reduce prepaid interest
At Prime Lending Corp, we provide a detailed Loan Estimate early in the process so there are no surprises at the closing table. Get in touch for a transparent breakdown of estimated costs for your purchase.