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The Real Cost of Buying a Home: Closing Costs in a Nutshell


When it comes time to close, what are these “closing costs” that are always talked about? Should a homebuyer be prepared to offer up a substantial amount on them?

Thanks to federal law, your lender is required to give you an estimate of the closing costs you will have to pay. Compare your loan estimate with the actual costs at closing.


Good-faith deposit

In many cases, the seller may ask you to put down a deposit “in earnest” to confirm your intention to buy. The idea is to show your commitment to the seller by putting a pre-determined amount of money on the line once you’re ready to start the closing process. 

In addition, this good-faith deposit goes toward funding your downpayment. And in instances in which you discover a deal-breaker in the house and want to back out prior to going into escrow, you can often get your deposit refunded.



The amount you put toward a downpayment will depend on a variety of factors that may be reflected in your lenders’ closing-cost estimate. These factors can include the type of mortgage loan you’re utilizing, as well as the cost of the home. 

Talk to your lender about the terms of your loan and determine a downpayment cost you can afford. Start saving up well in advance of beginning your house search so you have some money set aside – some loans require a downpayment of three to five percent of the loan amount.

Learn More About Downpayment Assistance


Agent fees

Depending on your real estate agent, there might be fees connected to the services your agency of choice provides. Talk to your agent to determine what kinds of fees you can expect through the process.

Not all agencies charge fees on top of the commission they earn from the sale (and often the commission comes from the seller’s pockets), but it’s a good idea to find out upfront what’s coming on the final bill.


Other costs

Additional costs involved in the closing of a house sale are varied and depend on your unique situation, but they often include associated taxes, escrow costs, fees for obtaining a home appraisal, title insurance expenditures, recording fees and survey costs.



Plan for any potential closing surprises. Know your closing-cost responsibilities and make the process smooth for all parties involved.

Topics: Homeownership

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