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What Are Mortgage Closing Costs?

When considering the out-of-pocket expenses needed to purchase a home, a common misconception is that you will only need to cover the down payment. Many homebuyers find at the end of the home buying process that they did not account for a necessary expense – the closing costs.

To avoid any unwanted surprises during your home purchase, it’s important to understand what closing costs are, how much they cost, and who pays them.


Whether you are purchasing or refinancing a home, you are required to pay closing costs. Closing costs are comprised of various fees required to finalize a mortgage.

Below are the services and fees your closing costs may include:

  • Property-related fees
  • Loan-related fees
  • Mortgage insurance fees
  • Property taxes
  • Title fees

To review a thorough breakdown of these closing costs, click here.

Under the Truth in Lending Act (TILA), your lender will provide you a loan estimate outlining your closing costs within three business days of taking your loan application. After receiving the loan estimate, you should ask your lender any questions you may have regarding the various fees.


As a rule of thumb, the average closing costs run between 2-5 percent of the loan amount.

For instance, if the purchase price of a home is $350,000 your closing cost fees would typically range from $7,000 to $17,500.


Homebuyers typically pay closing costs, but in some instances you may choose to negotiate these fees, like title insurance or other inspections, with the seller of the home. A seller is more likely to cover the closing costs if their property has been on the market for a long time, isn’t getting many offers, or if they are on a time crunch to get out. Either way, it doesn’t hurt to ask.

Depending on your financial background and where you live, you may qualify for closing cost assistance paid for by a government agency. You should always check to see if you qualify for assistance when purchasing a home, especially if you are a first-time homebuyer.

Talk to one of our loan officers today to answer any of your closing cost or mortgage-related questions!