Then the closing disclosure lands, and there is a number on the last page you did not fully plan for.
Closing costs are the fees charged to finalize a mortgage and transfer a home's title.
They typically run 2% to 6% of the purchase price, according to Consumer Financial Protection Bureau data.
On a $400,000 home, that is $8,000 to $24,000 due at signing—separate from your down payment.
For buyers stretching to cover a down payment, this is the part that breaks the budget.
Lender origination fees, an appraisal, a credit report, title search and title insurance, escrow or settlement fees, recording fees, and prepaid items like property taxes and homeowners insurance.
The largest line is often title insurance.
A lender's policy protects the bank if someone later claims ownership of the property.
In many states, buyers pay for both, and the combined cost can climb into the thousands.
Lenders usually require an escrow account funded upfront to cover future property taxes and insurance premiums, sometimes several months in advance.
This surprises first-time buyers the most because it is not a fee for a service—it is cash held in reserve.
The Loan Estimate arrives within three business days of your application.
The Closing Disclosure must reach you at least three business days before closing.
If a fee jumped, you are allowed to ask why in writing.
Homeowners insurance, title services, and settlement agents are often open to comparison, and the Loan Estimate marks which fees you can shop for.
Buyers who do not shop these can overpay by hundreds to a few thousand dollars.
They typically cover the real estate agent commissions, plus title transfer fees, prorated property taxes, and in some cases a portion of the buyer's closing costs as a negotiation chip.
In a slower market, that chip gets used more often.
There are ways to reduce the cash due at closing.
A lender credit trades a slightly higher interest rate for lower upfront fees.
Some loan programs allow seller concessions up to a set percentage.
Certain first-time buyer programs offer grants or down payment assistance that can also cover closing costs.
One caution: rolling closing costs into the loan lowers today's cash need but raises what you owe and what you pay in interest over the life of the mortgage.
The simplest defense is asking for the full fee list early, before you fall in love with a house.
Knowing whether you need $9,000 or $19,000 changes which homes you can actually afford—and it prevents the last-minute scramble that pushes buyers into bad loans.
Our take: closing costs are not a footnote to the homebuying process; they are a second purchase hiding inside the first.
Budget for them the moment you start touring homes, not the week before you sign.
Final Thoughts
The buyers who get burned are rarely the ones who paid too much for the house—they are the ones who never saw the last page coming.