Closing Costs Explained

A plain-language breakdown of every fee on your Loan Estimate and which ones you can actually shop.

The short answer

Closing costs typically run 2% to 5% of the purchase price. They fall into three buckets: lender fees (origination, underwriting, points), third-party services (appraisal, title, escrow, recording) and prepaid items (homeowners insurance, property taxes, prepaid interest). Lender fees and services you are allowed to shop are the negotiable parts; prepaids are your money, not a fee.

Key things to know

  • Lender fees: origination, underwriting and discount points
  • Third-party services: appraisal, credit report, title search and insurance
  • Government charges: recording fees and transfer taxes
  • Prepaids: homeowners insurance, property taxes and prepaid interest
  • Escrow reserves: the cushion your servicer holds for future bills

    • Read the full guide

    Mortgage Closing Costs Explained Line by Line

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