Closing Costs
The fees to finalize a mortgage, separate from your down payment, typically 2 to 5 percent of the purchase price (CFPB). They include lender, title, appraisal, and settlement charges.
Closing costs sit on top of your down payment, not inside it. They bundle the charges that make a loan official: lender origination and underwriting fees, title search and insurance, the appraisal, and various settlement and recording charges. On a refinance the mix is similar even though there is no purchase price changing hands.
The 2 to 5 percent range is a planning estimate, not a fixed figure. Actual costs vary by lender, loan type, state, and local taxes and recording rules. Treat the percentage as a range rather than false precision, and use the lender’s loan estimate and closing disclosure for the real numbers. Some costs are negotiable or can be offset by lender or seller credits.
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Related terms: Cash to Close , Prepaids , Down Payment , Transfer Tax , Title Insurance
Last updated . Part of the FinExplained finance glossary .