Closing Costs

Closing costs are the miscellaneous fees separate from the real estate agent and attorney fees that must be paid at closing. They cover things such as the following:

  • Loan processing
  • Title company fees
  • Surveyor costs (if needed)
  • Recording of the deed
  • Insurance
  • Any taxes or homeowners association fees, which may need to be prorated if they're already paid

The amount of the closing costs will vary with each home sale/purchase and can range widely from 2% to 7% of the home's purchase price. Typically, though, closing costs amount to about 3.5% of the sale price of a home.

Your lender will provide you with a “good-faith” estimate of your closing costs. Your attorney can also provide you an estimate of closing costs.

As for who pays the closing costs, and that's where negotiating skills come into play. There is no cut-and-dried rule about who—the seller or the buyer—pays the closing costs, but buyers usually cover the brunt of the costs (3% to 4% of the home's price) compared with sellers (1% to 3%).