Closing costs are the final financial surprise for many home buyers. Budget 2–5% of the purchase price — on a $400,000 home that's $8,000–$20,000 due at closing on top of your down payment.
Complete closing cost breakdown
| Cost | Typical amount | Negotiable? |
|---|---|---|
| Origination fee (lender) | 0.5–1% of loan | Yes — shop lenders |
| Discount points | Optional, 1% per point | Yes — skip if not staying long |
| Appraisal | $400–$700 | Somewhat |
| Home inspection | $400–$600 | No |
| Title search | $200–$400 | Fixed |
| Owner's title insurance | 0.5–1% of purchase price | Sometimes seller pays |
| Lender's title insurance | 0.2–0.5% of loan | Required |
| Attorney fee (required in some states) | $500–$1,500 | Fixed |
| Recording fees | $100–$250 | Fixed |
| Transfer taxes | Varies by state (0–2%) | Fixed by law |
| Prepaid interest (days to month-end) | $500–$2,000 | Fixed |
| Homeowners insurance (1 year prepaid) | $1,200–$3,000 | Shop and compare |
| Escrow setup (2–3 months taxes + insurance) | $2,000–$5,000 | Required by most lenders |
How to reduce closing costs
- Request seller concessions: Ask the seller to contribute 2–3% of the purchase price toward your closing costs. Common in buyer's markets. The seller may prefer to lower the price — but concessions are better for you if you're cash-constrained.
- Shop your own title insurance: In states where you can choose the title company, you can often save $300–$800.
- Compare Loan Estimates from 3+ lenders: Origination fees and lender-specific charges vary significantly. A LendingTree comparison can save $1,000–$3,000 in lender fees.
- Close at end of month: Prepaid interest is charged for days between closing and first full month. Close on the 28th–31st to minimize prepaid interest to a few days.
Within 3 business days of application, every lender must give you a Loan Estimate — a standardized 3-page document showing all costs. Compare Section A (lender fees), Section B (services you cannot shop), and Section C (services you can shop) across lenders. This is the tool that makes fee comparison accurate.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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