What needs to be paid when you close the deal for a home?

Closing costs are the fees and expenses—beyond the down payment—that buyers and sellers pay when a real estate transaction is finalized (“closed”). These costs cover everything from lender fees to title services, and they typically range from 2% to 5% of the home’s purchase price.

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🧾 What’s Included in Closing Costs?

🔹 For Buyers:

Buyer closing costs often include a loan origination fee charged by the lender for processing the loan, and an appraisal fee to have the home professionally valued. You may also pay for your credit report, title insurance, and a title search to ensure the home has no legal claims or liens.

Other common costs include recording fees (to make the sale official with the county), attorney fees (in states where required), and prepaid items like a few months of property taxes and homeowners insurance. Many lenders also require an escrow account to hold funds for future taxes and insurance. In some cases, you might also pay a survey fee if the property boundaries need verification.

🔹 For Sellers:

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Sellers typically pay the real estate agent commissions (often 5–6% of the sale price, split between the listing and buyer’s agents), any outstanding property taxes or liens, and title transfer fees. Depending on negotiations, sellers might also agree to cover some buyer closing costs.

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🏦 Can Closing Costs Be Rolled Into the Loan?

Yes, sometimes—especially during a refinance. On a home purchase, you may be able to negotiate with the seller to cover some costs or use lender credits (where you accept a slightly higher interest rate in exchange for reduced upfront costs).

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💡 How to Reduce Closing Costs:

You can reduce your closing costs by shopping around for lenders, comparing title service providers, and asking questions early. Be sure to review the Loan Estimate (provided early in the loan process) and the Closing Disclosure (given a few days before closing) so you know what you’re paying.

Also, look into first-time homebuyer programs or local assistance options that may help cover part of your closing expenses.

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✅ Summary:

Closing costs are an essential part of any real estate deal. While they may seem like a lot, many of the charges are negotiable, and there are ways to plan ahead and even reduce them. If you’re budgeting to buy a home, make sure to factor in these costs so you’re fully prepared on closing day.