1. What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing a real estate transaction, typically ranging from 2% to 5% of the loan amount. These costs are paid at the closing of the real estate transaction.

2. How to Calculate Closing Costs

The basic formula for calculating closing costs is:

Where:

• Lender Fees - Charges from your mortgage lender (loan origination, underwriting, etc.)
• Title Insurance - Protects against ownership disputes
• Appraisal - Professional property valuation
• Taxes - Property and transfer taxes
• Escrow - Funds held for property taxes and insurance

3. Typical Closing Cost Components

Common Fees:

• Loan origination fee (0.5% to 1% of loan)
• Credit report fee ($25-$50)
• Title search and insurance ($700-$2,000)
• Home inspection ($300-$500)
• Appraisal fee ($300-$500)
• Prepaid interest and property taxes

4. Using the Calculator

Tips: Enter all cost components in USD. The calculator will sum all values to provide your total closing costs. For accurate results, consult your loan estimate or closing disclosure.

5. Frequently Asked Questions (FAQ)

Q1: Can closing costs be rolled into the mortgage?
A: Sometimes, but this increases your loan amount and interest paid over time.

Q2: Are closing costs negotiable?
A: Some fees can be negotiated or shopped for (like title insurance), while others are fixed.

Q3: Who pays closing costs - buyer or seller?
A: Typically the buyer pays most, but sellers may pay some in negotiations.

Q4: When are closing costs paid?
A: At the closing/settlement, when the property title transfers.

Q5: How can I reduce closing costs?
A: Compare lenders, negotiate fees, ask about lender credits, or request seller concessions.