What Are Closing Costs in a Mortgage and How Much Should You Expect to Pay?
Understanding Closing Costs in a Mortgage
You’ve found the home, gotten approved for the loan, and now you're counting down the days to closing. But before you get the keys, there’s one final hurdle: closing costs.
These fees can surprise buyers if they’re not prepared—but they’re also a normal part of the home financing process. In this quick guide, we’ll break down what closing costs are, who pays them, and how you can plan ahead.
💸 What Are Closing Costs?
Closing costs are a combination of lender fees, third-party charges, and prepaid items due at the time your mortgage loan is finalized. They typically range between 2% and 5% of the purchase price.
For example:
On a $400,000 home, expect between $8,000 and $20,000 in closing costs depending on loan type, location, and lender.
🧾 Common Closing Cost Items:
Here’s a breakdown of what’s usually included:
Lender Fees:
Loan origination fee
Underwriting and processing fees
Discount points (if applicable)
Third-Party Fees:
Appraisal
Credit report
Title search and title insurance
Survey and notary fees
Attorney fees (in some states)
Prepaids & Escrows:
Homeowners insurance
Property taxes (up to 6 months upfront)
Mortgage insurance (if required)
Daily interest from closing to month’s end
🤝 Who Pays Closing Costs?
Typically, buyers pay the majority of the closing costs, but there are exceptions:
Sellers may offer concessions to help cover some costs.
In competitive markets, buyers may offer to cover more to win bids.
First-time homebuyer programs and Down Payment Assistance (DPA) may also help reduce upfront expenses.
💡 Can Closing Costs Be Rolled Into the Loan?
✅ Yes—for refinances. Many lenders offer a no-closing-cost refinance by adding fees to the loan balance or offering a lender credit in exchange for a slightly higher rate.
❌ No—for most purchase loans. Unless the seller offers concessions or you're using lender credits, closing costs are due at the table.
🧠 How to Prepare
✅ Get a Loan Estimate (LE) early to review your costs
✅ Ask your loan officer about potential credits or savings
✅ Plan for cash to close including your down payment and closing fees
🚪 Final Thought
Closing costs aren’t a hidden “gotcha”—they’re a real part of owning a home. When you know what to expect, you can plan ahead, negotiate smart, and close with confidence.
💬 Let’s Make Your Next Move Smarter—Together.
Kelly Nadeau, NMLS #1027618
Ray Nadeau, NMLS #1027617 Empowered by NEXA Mortgage | Smart-N-Loans
Licensed in Florida
📱 Call or Text: (321) 321-9455
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