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Counting the Cost: A Buyer's Guide to Closing Costs

Buying a home can be an exciting and rewarding experience, but it can also be an expensive one. In addition to the down payment and monthly mortgage payments, buyers should be aware of closing costs, which can add thousands of dollars to the total cost of the transaction. In this article, we'll explore what closing costs are, what they typically include, and how buyers can prepare for them.

What are Closing Costs?

Closing costs are fees associated with the purchase of a home that are paid at the closing of the transaction. These fees can vary depending on the location, the lender, and the specifics of the transaction. Closing costs are typically paid by the buyer, although some fees may be split between the buyer and the seller.

What Do Closing Costs Include?

Closing costs can include a variety of fees, such as:

  1. Loan Origination Fee: This fee covers the lender's cost of processing the loan and can range from 1% to 2% of the total loan amount.

  2. Appraisal Fee: This fee covers the cost of having a professional appraiser assess the value of the property.

  3. Title Search and Title Insurance: These fees cover the cost of researching the property's history and ensuring that there are no liens or title defects that could impact the buyer's ownership rights.

  4. Home Inspection: This fee covers the cost of having a professional inspector assess the condition of the property and identify any potential issues.

  5. Escrow Fees: These fees cover the cost of setting up an escrow account to hold funds during the transaction.

  6. Recording Fees: These fees cover the cost of recording the sale with the local government.

  7. Taxes and Insurance: Buyers may be required to pay a portion of property taxes and insurance premiums at closing.

How Much Are Closing Costs?

Closing costs can vary depending on the location and specifics of the transaction. Typically, closing costs range from 2% to 5% of the purchase price of the home. For example, if you purchase a home for $300,000, closing costs could range from $6,000 to $15,000.

How Can Buyers Prepare for Closing Costs?

Buyers can prepare for closing costs by doing the following:

  1. Get an Estimate: Buyers should ask their lender or real estate agent for an estimate of the closing costs so they can plan accordingly.

  2. Negotiate with the Seller: Buyers may be able to negotiate with the seller to have them pay for some or all of the closing costs.

  3. Shop Around: Buyers should shop around for the best rates and fees from lenders, inspectors, and other service providers to reduce costs.

  4. Budget Accordingly: Buyers should factor in the closing costs when determining their budget for purchasing a home.


Closing costs are an important consideration for buyers when purchasing a home. While they can add thousands of dollars to the total cost of the transaction, buyers can prepare for them by getting an estimate, negotiating with the seller, shopping around, and budgeting accordingly. If you're considering purchasing a home, talk to your lender and real estate agent about what to expect when it comes to closing costs.

If you are involved in a real estate transaction, it is also important to consult with an attorney who specializes in real estate law to ensure that your rights and interests are protected. At AllenYLaw we have years of experience in dealing with real estate transactions and have seen it all. Contact Allen Yusufov today at (732) 874-1479 or for expert representation backed by years and thousands of transactions worth of experience.

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