Closing Costs: A Line-by-Line Reference Guide

What Closing Costs Are — and Who Pays Them

Closing costs are the fees and prepaid expenses due at the settlement table when a home sale is finalized. They are separate from the down payment and cover a range of services — lender processing, third-party title work, government recording, and insurance — that make the transaction legally and financially complete.

Buyers typically pay the majority of closing costs, though sellers often cover their own set of charges (primarily agent commissions and transfer taxes). Some costs are negotiable, and in certain markets buyers may ask sellers to contribute a credit toward buyer-side costs. See the full context of how closing fits into the purchase timeline in our walkthrough of the home purchase process.

Lender and Loan-Related Fees

These charges are imposed by the mortgage lender to originate, underwrite, and fund the loan. They appear in Section A of the Loan Estimate you receive within three business days of applying.

• Origination fee / points: Covers the lender's administrative cost of creating the loan. Discount points (prepaid interest) are optional and lower your rate in exchange for an upfront payment.
• Underwriting fee: Pays for the lender's review of your financial profile and property risk.
• Application fee: Some lenders charge this at submission; many do not. It is non-refundable if the loan is denied.
• Rate-lock fee: Charged by some lenders to hold an interest rate for a set period. Not universal.
• Credit report fee: The lender's cost to pull your credit; typically $25–$50.

Third-Party and Title Fees

These services are performed by companies other than your lender. You generally have the right to shop for lower-cost providers in this category, which is clearly indicated on your Loan Estimate.

• Title search: A review of public records to confirm the seller has clear ownership and no undisclosed liens exist.
• Lender's title insurance: A one-time premium protecting the lender against title defects discovered after closing. Almost always required.
• Owner's title insurance: Optional but strongly recommended; protects the buyer's equity for as long as they own the property. For more on what these terms mean within a contract, see our real estate contract terms guide.
• Settlement / closing fee: Paid to the title company or attorney conducting the closing.
• Survey fee: Verifies boundary lines; required by some lenders or in rural transactions.
• Home inspection fee: Usually paid before closing, but part of your total transaction costs.
• Appraisal fee: Required by lenders to confirm the property's value supports the loan amount.

Government, Prepaid, and Escrow Items

These line items are either government-mandated or represent funds collected in advance to cover ongoing homeownership obligations.

• Recording fees: Charged by the local government to officially record the deed and mortgage documents.
• Transfer taxes: Vary significantly by state and county; some states charge none, others charge 1%–2% of the sale price.
• Prepaid homeowners insurance: The first year's premium, paid at or before closing.
• Prepaid mortgage interest: Interest accrued between your closing date and the end of that calendar month.
• Initial escrow deposit: Seeds the escrow account that your lender uses to pay future property taxes and insurance on your behalf — typically two to three months of each.

Closing costs are only part of the long-term financial picture. Once you own the home, additional ongoing expenses begin. Learn about the hidden costs of homeownership that new owners routinely underestimate.