What Are Closing Costs?

When you buy or sell a home, you’ll hear about closing costs. But what are they, and how do they work? This guide explains.

Closing costs are fees charged by lenders, title companies, and other parties during the real estate transaction. They’re typically a percentage of the home’s purchase price or its loan amount, and they can add up to thousands of dollars.

List of Common Closing Costs

Here are some common closing costs:

Origination fee: This is the fee charged by the lender for processing the loan. It’s a percentage of the loan amount, and it can vary based on the type of loan, the borrower’s credit score, and other factors.
Appraisal fee: The lender will order an appraisal to make sure the home is worth the purchase price. The fee for this service is typically around $300.
Credit report fee: The lender will pull a credit report to check the borrower’s credit history. The fee for this service is typically around $30.
Document preparation fee: The lender will charge a fee for preparing the loan documents. This fee is typically around $100.

How Much Can I Expect to Spend on Closing Costs?

The amount you’ll spend on closing costs depends on a number of factors, including the price of the home and the type of agreement you have with your agent. In general, you can expect to pay 2 percent to 5 percent of the home’s purchase price in closing costs.

That means if you’re selling a $200,000 home, you can expect to pay between $4,000 and $10,000 in closing costs. Keep in mind that you can negotiate who pays which closing costs as part of the real estate contract.

Are You Buying a Home or Land for Sale in Lake City?

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$248,535

SW Mcgriff Ln & Kaman Lake City, Florida

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What Are Closing Costs?