Key Highlights

  • Homebuyers need to consider closing costs in addition to down payment costs
  • Some closing costs fixed, some negotiable

Closing Costs Drive Up Cost of Home Purchase

“Some buyers will just concentrate on saving for the down payment,” said Andy Sachs, and agent with Keller Williams in Newton CT, “but they might have to pare down their down payment to compensate for the closing costs and for other incidentals associated with their new home.”

Average Closing Costs Vary Nationwide

For a single-family home, taxes included, the average closing costs came in at $6,044 in 2020, according to ClosingCorp.

However, closing costs vary by location.  In the District of Columbia, closing costs averaged $28,088.  In Delaware, closing costs averaged $15,l614 and in Washington State $14,942.  Missouri had the lowest average closing costs at $1,560.

Specifics of Closing Costs

Word to the wise:  look around for a lender and get pre-approved for a mortgage before looking around for a house.  Lenders are required to provide a loan estimate first thing in the initial application process.  Just prior to closing, lenders are again required to provide a “closing disclosure” with locked-in costs and specific amounts.

Getting a Loan

Just assume the lender will want to determine the borrower’s creditworthiness by ordering a credit report.  Assuming there are no inaccuracies with the report, expect to pay $30 – $50/report.

Most lenders charge a fee for initiating and underwriting the loan. Additional fees may also include commitment fees plus a fee to lock in the interest rate on the loan.  Lenders may also include a fee for mortgage discount points (1% of the mortgage amount).

Appraisal Fee

Lenders usually require and order an appraisal on the property in order to assess the home’s value.  The typical appraisal fee rate ranges between $100 – $700.  If the property price is considered to be in a high-tier price range, the appraisal fee will likely be more.

Title Search and Insurance

Without appraised remediation requirements on the property, liens or judgments against the property, most lenders and brokers recommend a professional title search.  This is optional so negotiate it.  Title searches usually cost from $150 to $500.

Most lenders require title insurance as protection against potential disputes among the seller and buyer after the closing.  The buyer usually pays for the title insurance and fees can run from $200 – $2,000 depending up the state and the property price.  This is optional so shop around for the best deal and negotiate it.  Refer to the American Land Title Association.

Additionally, most lenders order a land survey ($400 – $700) to confirm property boundaries.  Lenders want to know who owns which trees where, who can build a fence where and whether or not the property sits on a flood zone.

Legal Fees

Some states require buyers to have a real estate lawyer at the closing transaction to review all necessary paperwork and documentation.  Buyers usually pay these legal fees.  Lawyers tend to charge either flat fees or hourly rates of $150 and up.


Thanks to The New York Times.


Claim Your FREE Real Estate Treasure Map!