Mortgage Glossary
Closing Costs
Fees paid at the closing of a home purchase, beyond the down payment. They typically range from 2–5% of the loan amount.
What It Means
Closing costs are the collection of fees and expenses paid on the day you officially close on your home. They cover services required to complete the mortgage transaction.
Common closing costs include:
- Loan origination fee — lender's fee for processing the loan
- Appraisal fee — cost of professionally valuing the home
- Title insurance — protects against ownership disputes
- Prepaid interest — interest that accrues before your first payment
- Escrow setup — initial deposits for taxes and insurance
- Recording fees — county fees for recording the deed
Closing costs typically range from 2–5% of the loan amount. Some can be negotiated or rolled into the loan.
Real-World Example
"On a $300,000 mortgage, closing costs might be $6,000–$15,000. Your lender will provide a Loan Estimate within 3 days of your application so you can see the full breakdown."
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Definitions are for educational purposes only and do not constitute financial or legal advice.