What Are Closing Costs? A Homebuyer's Complete Breakdown

One of the most common moments of sticker shock I see happens about three weeks before closing. A buyer has been focused on the purchase price, the down payment, and the monthly mortgage number—and then they get their Closing Disclosure and see another $12,000 they weren't expecting.

That number doesn't have to be a surprise. If you understand what closing costs actually are, where the money goes, and what you can do to bring them down, you'll walk into closing day with zero surprises and a lot more confidence.

Key Takeaways

• Closing costs typically range from 2% to 5% of the purchase price—on a $350,000 home, expect roughly $7,000 to $17,500.
• They cover lender fees, title insurance, appraisal, prepaid taxes and insurance, and more.
• Shopping lenders and comparing Loan Estimates side by side is one of the best ways to save. Seller concessions can cover part or all depending on your loan type.
• You'll see every cost on your Loan Estimate within three days of applying and again on your Closing Disclosure three days before closing.

What Exactly Are Closing Costs?

Closing costs are the fees and expenses you pay to finalize your mortgage and transfer ownership. They're separate from your down payment—your down payment goes toward the purchase price; closing costs go toward the process (lender fees, title, appraisal, prepaids).

How to Reduce Your Closing Costs

• Work with a mortgage broker who shops multiple lenders. The difference between lenders on the same loan can be $2,000 to $5,000 in closing costs.
• Compare Loan Estimates side by side. Pay attention to origination charges and services you can shop for.
• Negotiate seller concessions. In the current market, asking the seller to cover part or all of your closing costs is one of the most effective tools buyers have. Limits depend on your loan type (FHA up to 6%, VA up to 4%, Conventional 3%–9%).
• Time your closing date. Closing later in the month can reduce prepaid interest.

By Dawn Robbins Group | NMLS# 432345

This content is for educational purposes only and does not constitute financial advice. Every buyer's situation is unique. Contact Dawn Robbins Group for personalized guidance.

[Book a consultation →](https://calendly.com/dawn-robbins/30min)