The house is priced at $350,000, but the check you write on closing day is bigger.
Closing costs typically run 2% to 6% of the loan amount, according to borrower surveys, which means a $350,000 purchase can tack on $7,000 to $21,000 before you get the keys.
On a typical 30-year mortgage, that's often another 2% to 5% of the home's price paid upfront.
It splits into two buckets: costs tied to getting the loan and costs tied to the property itself.
Lenders charge for processing, underwriting, and running your credit.
Third parties charge for the appraisal, title search, title insurance, and a home inspection.
Then come prepaid items, like property taxes and homeowners insurance, which you fund upfront into an escrow account.
Some of these fees are shoppable; others are not.
Your lender's origination fee is set, but you can call around for title services and compare quotes.
A 2024 Consumer Financial Protection Bureau review found that borrowers could save real money by comparing title insurance and settlement services instead of accepting the first quote.
Your best tool is the Loan Estimate, a three-page form you must receive within three business days of applying.
If a number changes dramatically by closing, the Closing Disclosure — which you get at least three business days before signing — is where you compare it line by line.
If something looks off, ask before you sign, not after.
A few fees are negotiable in ways people forget.
If you're buying in a slow market, you can ask the seller to cover a portion of closing costs, a concession that effectively lowers your cash due at signing.
You can also ask your lender about waiving or reducing certain fees, especially if you're a repeat customer or have strong credit.
Here's the part that trips up first-time buyers: closing costs are usually due as a cashier's check or wire transfer on closing day.
That money isn't part of your down payment, and it can't come from a credit card.
If you're already stretching to hit a 20% down payment, run the closing cost math early so you're not scrambling in the final week.
Scammers send convincing emails with fake wiring instructions right before closing.
Always confirm wiring details by calling the title company at a number you looked up yourself, never one from an email.
One more thing: closing costs vary by state.
Title insurance is pricey in some states and cheaper in others, and transfer taxes can add thousands depending on where you buy.
A quick call to a local title company before you make an offer gives you a realistic number.
Our take: treat closing costs as part of the purchase price, not an afterthought.
Budget for them from day one, shop the services you're allowed to shop, and never sign a Closing Disclosure you don't understand.
Final Thoughts
A few hours of comparison shopping can easily save four figures at the table.