Closing costs vary widely based on where you live and the property you buy. Closing costs often include things such as:
A fee for running your credit report.
A loan origination fee, which lenders charge for processing the loan paperwork for you.
Charges for any inspection required or requested by the lender or you.
Discount points, which are fees you pay in exchange for a lower interest rate.
Survey fee, which covers the cost of verifying property lines.
Title insurance, which protects the lender in case the title isn’t clean.
Title search fees, which pay for a background check on the title to make sure there aren't things such as unpaid mortgages or tax liens on the property.
Escrow deposit, which may pay for a couple months' property taxes and private mortgage insurance.
Floord certification fee.
Recording and transfer fee, which is paid to a city or county in exchange for recording the new land records.
Underwriting fee, which covers the cost of evaluating a mortgage loan application.
Typically, home buyers will pay between about 3 and 5 percent of the purchase price of their home in closing costs. So, if your home cost $150,000, you might pay between $3,000 and $7,500 in closing costs. As you write up your offer, you can often ask the seller to pay a portion of your closing costs.
Lenders are required by law to give you a good faith estimate (GFE) of what the closing costs on your home will be within three days of when you apply for a loan. But these are just an estimate, and many of the fees listed on the GFE can legally change by up to 10 percent, potentially adding thousands of dollars to your final closing cost bill.
Within a day of your closing, the lender should give you a HUD-1 settlement statement, which outlines closing costs. Compare this to your GFE and ask the lender to explain what each line item on your closing costs is and why it is needed. Often, many of the fees that make up closing costs are negotiable, and some are completely unnecessary, especially things such as high administrative, mailing or courier costs charged by your lender. If the closing costs come in high, you can walk away from the loan; there are plenty of lenders who might be willing to offer you lower closing costs.