You've saved for the down payment, gotten pre-approved, and found a house you love.
Then the lender hands over a Loan Estimate, and suddenly there's a second pile of money you need that nobody warned you about.
Closing costs are the fees charged to finalize a mortgage, and they typically run 2% to 6% of the loan amount.
On a $300,000 loan, that's anywhere from $6,000 to $18,000 — due in cash on closing day, separate from your down payment.
Where the money actually goes Some of these fees are unavoidable.
Appraisal, title search, title insurance, and recording fees are standard on nearly every home purchase.
Others, like origination fees and discount points, vary widely by lender and are worth shopping around.
The Loan Estimate form has three pages, and page two is where the real money lives.
Look at the "Services You Can Shop For" section.
You're allowed to hire your own title company, inspector, or surveyor, and doing so can shave hundreds off the total.
The trap most buyers fall into Lenders sometimes pad costs by bundling "processing" or "underwriting" fees that vary wildly between companies.
One lender might charge $500 for underwriting; another charges $1,200 for the same work.
There's no standard rate, which means there's no reason to accept the first quote.
Get at least three Loan Estimates within a two-week window.
That timing matters: multiple mortgage inquiries inside 14 days typically count as a single credit pull, so comparison shopping won't wreck your score.
What you can negotiate Everything in the "Services You Can Shop For" bucket is fair game.
Title insurance is the biggest one — it can run $1,000 or more on a mid-priced home, and you can often request a reissue rate if the seller recently refinanced.
You can also ask the seller to cover a portion of your closing costs, known as a seller concession.
In a slower market, many sellers will agree.
It's one of the most underused negotiating tools available to buyers right now.
Closing costs on a refinance work differently.
They're usually lower — often 2% to 3% — and some lenders offer "no-cost" refis that fold the fees into a higher interest rate.
That trade-off only pays off if you stay in the home long enough to break even.
How to prepare Ask your lender for a full breakdown before you make an offer, not after.
Budget closing costs into your savings from day one, alongside the down payment.
And never sign a Closing Disclosure — the final five-page document you get three business days before closing — without comparing it line by line against your original Loan Estimate.
Our take: closing costs are one of the few home-buying expenses you can genuinely shrink with a few phone calls and some patience.
Most buyers treat them as fixed, hand over thousands without a second look, and never realize they could have saved a mortgage payment or two.
Final Thoughts
Spend an afternoon comparison shopping — your future self will thank you.