When you're buying a home or refinancing, it's easy to get focused on the interest rate and monthly payment. But many buyers are caught off guard by the final step: closing costs. These one-time fees can add thousands of dollars to your upfront expenses. In this guide, we break down the most common closing costs so you can plan ahead and avoid surprises at the closing table.

What are closing costs?

Closing costs are the fees and charges you pay when you finalize your mortgage. They’re separate from your down payment and cover everything from loan origination to title insurance. Most are paid on the day of closing, though some can be negotiated or even paid by the seller, depending on the terms of your contract. Sometimes, you can even roll some of your closing costs into your loan. 

Whether you’re a first-time homebuyer or a seasoned investor, understanding common closing costs helps you avoid sticker shock and make more informed financial decisions.

Why closing costs vary

Before diving into specific items, it's important to understand that closing costs can vary depending on:

• Your loan type (conventional, FHA, VA, etc.)
• The property’s location and price
• Your lender’s policies and fees
• State and local taxes and recording fees

For example, buyers in New York City or Los Angeles may see much higher closing costs due to taxes and legal requirements compared to buyers in smaller markets.

The most common closing costs

Here are the most common closing costs you’ll encounter during a typical real estate transaction:

#1: Loan origination fee

The lender charges this fee to process and underwrite your mortgage. It’s usually about 0.5% to 1% of the loan amount. In some cases, it may be bundled with other lender fees or labeled as an "application fee" or "underwriting fee."

#2: Appraisal fee

This covers the cost of hiring a licensed appraiser to determine the property’s market value. Lenders require an appraisal to ensure the home is worth at least what you're borrowing. In most markets, you can expect to pay between $300 and $600.

#3: Credit report fee

To evaluate your creditworthiness, your lender will pull your credit report. This typically costs $25 to $50 and is a non-refundable fee, even if the loan doesn’t close.

#4: Title search and title insurance

A title search checks public records to ensure there are no legal claims or liens against the property. Title insurance protects the lender — and sometimes the buyer — against future title disputes. Together, these can cost $500 to $1,500 depending on the state and property value.

#5: Recording fees

Your local government charges a fee to record the property deed and mortgage documents in public records. This cost varies widely by location but generally falls between $50 and $300.

#6: Survey fee

In some areas, a survey of the property’s boundaries is required. This ensures the home sits on the lot described in public records. Surveys typically cost $300 to $700, though some lenders waive this for condos or townhomes.

#7: Prepaid taxes and insurance

You may need to prepay a portion of your property taxes and homeowners insurance at closing. These prepaid items are not technically fees, but they are still considered part of your closing costs. Lenders may also require an escrow account to manage these payments going forward.

#8: Mortgage insurance

If you’re putting down less than 20%, you may owe private mortgage insurance (PMI) or upfront mortgage insurance premiums for FHA loans. These can be rolled into the loan or paid at closing, depending on the loan program.

#9: Attorney fees

Some states require a real estate attorney to be involved in the closing process. Even in states where it’s optional, some buyers hire one for peace of mind. Attorney fees typically range from $500 to $1,500.

#10: Escrow or closing fees

The escrow or closing agent — often a title company or attorney — facilitates the transaction, holds funds, and makes sure documents are properly signed and distributed. Their fee usually runs $500 to $1,000 and is split between the buyer and seller, though this varies.

How to reduce your closing costs

While you can't avoid all closing costs, there are smart ways to reduce them:

• Compare lender estimates: Shop around and request loan estimates from multiple lenders. Pay attention to origination and underwriting fees.
• Negotiate with the seller: Ask for a seller credit toward closing costs, especially in a buyer’s market.
• Use lender credits: Some lenders offer credits in exchange for a slightly higher interest rate. This reduces your upfront costs, but increases long-term interest payments.
• Close at month-end: You can reduce prepaid interest by closing later in the month, since you’ll owe interest only for the remaining days.

Closing cost disclosure requirements

Thanks to the TRID rule (TILA-RESPA Integrated Disclosure), lenders must provide you with:

• A loan estimate within 3 business days of your application, outlining estimated closing costs
• A closing disclosure at least 3 business days before closing, showing final costs and comparing them to the original estimate

Review both documents carefully to spot discrepancies, ask questions, and confirm your closing cost numbers.

Common misconceptions about closing costs

Let’s clear up a few myths:

• "The down payment includes closing costs." False. These are separate charges.
• "The seller always pays closing costs." Not always — this depends on your negotiation.
• "Closing costs are fixed." They vary widely and can often be negotiated or offset.

Being informed about the common closing costs will put you in a stronger position to plan your budget and possibly even reduce your expenses.

Getting ready for closing

Closing costs may not be as exciting as picking out paint colors or closing day selfies, but they’re a crucial part of your homebuying budget. From lender fees to legal and tax charges, the common closing costs you’ll face can quickly add up. But with a little planning, you can navigate them with confidence and maybe even save a few thousand dollars.

Getting a feel for your closing costs comes down to getting loan estimates from a few different lenders. To help you pinpoint which lenders might be worth an application, you can use our live mortgage rate tables.

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