How Much are Closing Costs on a Home and What are They?
Closing costs can be a hassle when you’re trying to purchase a home. It’s extra money you’ve got to prepare along with the down payment, earnest money, and numerous other fees.
Feeling over your head as a first-time home-buyer, it’s easy to be sick to your stomach with large closing cost sums. You may not be able to afford them and jump into your dream home, being forced to wait as the market rages on.
We want to show you what closing costs are and the averages you could realistically have.
You can get an idea of what you might be paying based on the loan amount, where you live, and the type of loan.
What are closing costs?
Experienced lenders spend dedicated time on your home loan to make the process as smooth as possible. Their personalized service is part of the closing costs you’ll pay at the signing table.
They take hours out of their schedule to cooperate with you and the real estate agent to fund your dream home without any issues. Securing financial documents, they’ll take tax returns, bank statements, and more into official underwriting review.
Other interested parties require payment too, such as the HOA, the title company, etc. They spend time reviewing applications and financial documents as well as proving insurance for titles and the property.
At the end of the day, closing costs are a necessary part of the homebuying adventure. They take you safely into the final day where you get the keys in hand.
Who pays closing costs?
Everyone pays for closing costs, including buyers and sellers. However, you’ll cough up additional funds if you’re buying a new or used property from a company or individual.
The loan type plays a key role in what percentage of the loan amount you provide the lender.
Many depend on your dream home’s purchase price vs. its appraised value. That means you’ll need to get pre-qualified and have an offer down to find out specific numbers.
| Loan Type | Closing Costs |
|---|---|
| Conventional Loan | 3% to 9% (depending on your down payment) |
| FHA Loan | 6% (the lesser of the appraised value and purchase price) |
| VA Loan | Up to 4% (the lesser of the appraised value and purchase price) |
How much are closing costs?
Closing costs feature dozens of fees related to loan processing, home insurance, and titles. When asking how much closing costs are, you should consider all of them for an accurate picture.
Look below to see average prices for closing costs you’ll pay on a home loan. They are subject to change and an experienced lender can personalize them to where you live and your loan type
| Type of Closing Cost | Average Price |
|---|---|
| Appraisal Fee | $300 to $400 |
| Home Inspection | $300 to $500 |
| Title Search Fee | $200 |
| Morgage Broker Fee | .5% to 2.75% |
| Upfront Mortgage Insurance | .55% to 2.25% |
| FHA, VA, and USDA Fees | 1% to 3.3% |
| Owner’s Title Insurance | .5% to 1% of purchase price |
| Origination Fee | .05% of loan amount |
| Discount Points | 1% of loan amount per discount point |
| Prepaid Interest | Based on loan amount |
| Homeowners Insurance | Depends on home value and location |
| Attorney’s Fee | Hourly rate |
| Application Fee | Varies |
| Assumption Fee | Varies |
| Mortgage Insurance Application Fee | Varies |
| Upfront HOA Fee | Varies |
| Lender’s Title Insurance | Varies |
*Data from NerdWallet*
Personalized Closing Cost Calculator
While the average closing costs are helpful when preparing for a home purchase, they do not provide a specific number. You’ll still be in the dark for how much your family should save before searching for a property.
Our team tailors your closing costs to the home you’ve always wanted, whether it’s a property up the street or on Zillow.
We process your loan information quickly and even advise on how to strategically pay closing costs while juggling the down payment and other fees.
Simply fill out an application, and Jimmy Vercellino and our Highly Motivated Vercellino team will reach out as soon as possible
Get Personalized Closing Costs
What are the different types of closing costs?
From application fees and insurance to inspections and discount points, you’ll encounter dozens of closing costs.
The lender manages them and keeps you informed of what to pay and when to pay them. Their job is to keep your dream home timeline running alongside the real estate agent, which includes closing costs.
Read more about how each closing cost benefits you and the property you’re buying or selling.
| Type of Closing Cost | Definition |
|---|---|
| Appraisal Fee | The fee you’ll pay for an official home appraiser to provide a value for the property. |
| Home Inspection | Pay for a home inspector to ensure your dream home has good bones and doesn’t require repairs. |
| Title Search Fee | A specialist labors over searching for your dream home’s title and ensuring the seller actually owns it. |
| Mortgage Broker Fee | Any mortgage broker you partner with to find a loan charges a small commission fee for their work. |
| Upfront Mortgage Insurance | You may need to pay 1 year of mortgage insurance as a part of your closing costs. This depends on the policy of your lender or mortgage company. |
| FHA, VA, and USDA Fees | Each loan type has unique closing costs, such as the VA Funding Fee and FHA mortgage insurance premium. |
| Owner’s Title Insurance | Title insurance is helpful if anything goes wrong with your home title after closing the home. |
| Origination Fee | Covers document preparation, preparing your mortgage loan for closing, and more. This is one of the more expensive closing costs. |
| Discount Points | Lower your loan’s interest rate by a certain percentage for each “point” you purchase. |
| Prepaid Interest | The lender charges you for interest on the loan before your first monthly payment. |
| Homeowners Insurance | Protecting your dream home in case of disaster or theft, the lender could ask for you to obtain an insurance policy for the home. |
| Attorney’s Fee | If your state asks for a real estate attorney to be present, it will cost hourly for their services. |
| Application Fee | The lender processes your new loan and is a fee for credit checks and other work. |
| Assumption Fee | You’ll pay for taking over an assumable loan from a seller depending on how much is left. |
| Mortgage Insurance Application Fee | Applying for a home loan means covering a small fee for review purposes. |
| Upfront HOA Fee | The HOA requires you to pay for buying a property in their vicinity from the seller. |
| Lender’s Title Insurance | Lenders sometimes want financial protection in case their title search has errors. The actual owner may sue them for selling you a house that isn’t available. |
What are the average closing costs in my state?
With a personalized loan, you’ll find each state has different average closing cost amounts. They factor in state taxes and help provide clarity to what you might be paying at the signing table.
Take a look at what you could pay on average in your home state. No matter where you live, our lenders can help you get started with an exciting home buying journey nationwide.
| State | Average Closing Costs (Including Taxes) | Average Closing Costs (Excluding Taxes) |
|---|---|---|
| Alabama | $2,370.78 | $2,141.32 |
| Alaska | $3,442.08 | $3,442.08 |
| Arizona | $4,190.34 | $4,190.34 |
| Arkansas | $2,578.04 | $2,053.18 |
| California | $6,878.85 | $5,366.36 |
| Colorado | $3,658.59 | $3,590.71 |
| Connecticut | $7,302.98 | $3,643.25 |
| Delaware | $17,727.42 | $3,686.87 |
| Florida | $8,213.44 | $4,147.03 |
| Georgia | $3,610.38 | $2,700.63 |
| Hawaii | $7,126.99 | $5,599.56 |
| Idaho | $3,543.68 | $3,543.68 |
| Illinois | $6,529.74 | $4,893.99 |
| Indiana | $2,100.62 | $2,100.62 |
| Iowa | $2,272.18 | $2,020.50 |
| Kansas | $2,548.34 | $2,548.34 |
| Kentucky | $2,229.03 | $2,069.06 |
| Louisiana | $3,827.04 | $3,502.04 |
| Maine | $3,761.35 | $2,618.58 |
| Maryland | $11,709.74 | $3,825.82 |
| Massachusetts | $7,035.04 | $4,434.06 |
| Michigan | $4,210.71 | $2,844.73 |
| Minnesota | $3,842.64 | $2,427.46 |
| Mississippi | $2,578.12 | $2,578.12 |
| Missouri | $1,571.05 | $1,571.05 |
| Montana | $3,020.65 | $3,020.65 |
| Nebraska | $2,714.81 | $2,152.23 |
| Nevada | $5,585.68 | $3,870.60 |
| New Hampshire | $8,039.46 | $2,724.97 |
| New Jersey | $7,827.87 | $4,029.69 |
| New Mexico | $2,824.85 | $2,824.85 |
| New York | $13,261.67 | $5,571.32 |
| North Carolina | $2,802.91 | $2,260.63 |
| North Dakota | $2,381.24 | $2,381.24 |
| Ohio | $3,319.45 | $2,772.13 |
| Oklahoma | $2,942.99 | $2,561.16 |
| Oregon | $3,910.88 | $3,545.83 |
| Pennsylvania | $9,437.44 | $3,044.98 |
| Rhode Island | $4,618.81 | $2,979.96 |
| South Carolina | $3,268.96 | $2,331.87 |
| South Dakota | $2,276.02 | $2,023.50 |
| Tennessee | $3,790.39 | $2,584.15 |
| Texas | $3,753.65 | $3,753.65 |
| Utah | $4,612.20 | $4,612.20 |
| Vermont | $5,946.84 | $3,038.06 |
| Virginia | $6,185.83 | $3,357.78 |
| Washington | $11,513.23 | $4,205.82 |
| Washington, DC | $29,329.89 | $6,250.20 |
| West Virginia | $3,352.29 | $2,405.02 |
| Wisconsin | $3,221.17 | $2,456.08 |
| Wyoming | $2,572.39 | $2,572.39 |
*Data from ClosingCorps*
How can I reduce closing costs?
It’s always wise to lower closing costs if you can. Whether you think they’re too high or you’re buying a home on a budget, there are methods to reduce the price.
We recommend shopping around with several lenders to compare their fees. Keep in mind that some lenders may have a cheap rate but not keep up with the pace of the market.
You could lose the home your family HAS always wanted due to a lack of personalized service.
The seller can cover some or all your closing costs if the real estate agent can strike the deal. It can be useful in cases where you don’t have the closing costs but are willing to raise the purchase price in turn.
Finally, an experienced lender will receive the initial loan estimate with the closing disclosure forms. There is a chance your closing costs will be lower than what was initially expected.
Close Your Dream Home with Personalized Lenders
Purchasing your first or second home doesn’t have to be stressful: it can be an exciting adventure. Our experienced lending team is dedicated to helping you close on your dream home and walking you through the process every step of the way.
We help you get pre-qualified for the right type of loan that fits your budget and needs. There’s no need to fear taking the next step when our lending professionals are at your side.
Speak with Jimmy Vercellino and our Highly Motivated Vercellino team today by calling (480)-800-8387.