You've saved for the down payment, gotten pre-approved, and found a house you love.
Then the lender hands you a Loan Estimate, and there's a second number at the bottom that nobody warned you about.
It's called closing costs, and for most buyers it runs between 2% and 6% of the purchase price.
On a $300,000 home, that's $6,000 to $18,000 due at the closing table — on top of your down payment.
Here's what you're actually paying for, and where you have room to push back. **What's inside the pile** Closing costs are a bundle of fees from several different parties, not one lump charge.
The biggest line items usually include the loan origination fee (what the lender charges to make the loan), an appraisal fee, title search and title insurance, and prepaid items like property taxes and homeowners insurance that get collected upfront into escrow.
Then there's a grab bag of smaller charges: credit report pulls, flood certification, recording fees at the county clerk's office, courier fees, and sometimes a document preparation charge.
Together they add up fast. **Where the real money hides** Two categories matter most.
First, prepaid escrow items — you're funding months of taxes and insurance in advance, and in high-tax states like New Jersey or Illinois, that alone can hit five figures.
Second, title insurance, which protects the lender if someone later claims ownership of your home.
You often pay for the lender's policy, and you're offered an optional owner's policy too.
Ask whether a reissue rate applies if the seller recently refinanced.
Discount points are prepaid interest that lower your rate.
They can be worth it if you'll stay in the home long enough to break even — usually five to seven years — but they're not free money. **You can negotiate more than you think** Lender-controlled fees are the most flexible.
Origination fees, application fees, and rate lock fees vary widely between lenders, and shopping at least three Loan Estimates within a short window is the single best move.
Mortgage inquiries within a 45-day window generally count as one hard pull for scoring purposes, so comparison shopping won't wreck your credit.
In a slower market, it's common to ask the seller to cover a percentage of closing costs — often 2% to 3% — in exchange for a slightly higher purchase price.
Conventional and FHA loans cap concessions, so ask your agent what's allowed. **Watch the fine print** Your Loan Estimate must arrive within three business days of application.
Compare it line by line to the Closing Disclosure you receive at least three business days before closing.
Certain fees — origination, transfer taxes, and the lender's title policy — can't increase from the estimate.
Also budget for the costs nobody mentions: a home inspection ($300 to $500), moving truck, utility deposits, and the first month of escrow padding.
Many buyers drain their savings on closing day and then have nothing left for a broken water heater in month two. **One honest take** Closing costs are not a scam, but they are deliberately opaque, and lenders count on buyers being too exhausted to question them.
Final Thoughts
The buyers who save real money are the ones who treat the Loan Estimate like a car sticker — walk away from the first offer and make the second lender beat it.