Closing Costs
Closing costs are fees paid at the end of a real estate transaction to complete the mortgage. They typically range from 2–5% of the loan amount and include lender fees, title insurance, appraisal, and prepaid items.
On a $300,000 loan, 3% closing costs = $9,000 due at closing, on top of your $30,000 down payment (10%).
Closing costs are due on the day you finalise (close) the purchase. They are separate from the down payment and catch many first-time buyers off guard. On a $350,000 mortgage, expect $7,000–$17,500 in closing costs.
Common closing costs include: origination fees (0.5–1% of the loan), appraisal ($400–$700), title insurance ($500–$2,500), title search, prepaid interest, homeowners insurance prepayment, and property tax escrow deposits.
Some lenders offer "no-closing-cost" mortgages, which roll the fees into the loan balance or the interest rate. You still pay — just over the life of the loan rather than upfront.
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Open calculator →Related terms
- Origination Fee
- An origination fee is a charge by a lender to process a new loan application. It covers the cost of underwriting, administrative work, and loan setup. It is expressed as a percentage of the loan amount (typically 0.5–1%) or as a flat dollar amount.
- Mortgage Points (Discount Points)
- Mortgage points are upfront fees paid to a lender to reduce (buy down) the interest rate on a loan. One point equals 1% of the loan amount. Paying points makes sense if you plan to stay in the home long enough to recoup the upfront cost.
- Mortgage Payment
- A mortgage payment is the fixed monthly amount owed to a lender, covering principal and interest (P&I). It may also include escrow for property tax and homeowners insurance (PITI).
- Refinancing
- Refinancing replaces an existing loan with a new one, typically at a lower interest rate, different term, or both. The goal is usually to reduce monthly payments or total interest paid.