What Are Closing Costs?

If you’re buying a home for the first time, you might have some questions about the many steps involved. One of those being paying closing costs — one of the final tasks before the keys to your new home are handed to you. 

But what are closing costs, who pays them, and what do they even include? This Moving Help® guide will help you understand the ins and outs of closing costs, so you can be prepared for what’s to come. 

What Are Closing Costs? 

Closing costs are a collection of one-time fees and expenses that homebuyers and sellers pay before the home is officially sold, and ownership is transferred. The costs are due at the end of the transaction along with the down payment. 

The fees are charged by the lender, real estate agent, local governments, and other parties involved in the homebuying process.  

Closing costs commonly include: 

Every home loan looks different. As such, your closing costs will vary based on your loan amount, state, and type of loan. Before closing, you’ll receive a loan estimate and a closing disclosure that lays out each line item in detail for your review. 

For full definitions of common closing fees, visit our glossary section below. 

Who Pays Closing Costs? 

The homebuyer typically pays most of the closing costs, with the seller picking up the tab on a few fees, such as real estate agent commissions and transfer fees. 

The seller also may pay some of the closing costs as a concession, but that’s often negotiated in the buying process and is more likely in a buyer’s market. 

Below is a full breakdown of who pays what for the closing costs. 

Higher-cost or high-tax areas often land on the upper end of the range, while some lender-fee-light scenarios or smaller mortgages may be lower.  

Online mortgage closing cost calculators can help you budget. These tools typically ask for the home price, down payment, loan type, and ZIP code to estimate taxes, insurance, and fees. Use these tools early in your search to set savings goals and again after you receive your loan estimate to compare lenders. 

What’s Included in Closing Costs? Glossary of Definitions

Closing costs bundle many line items. Not all apply to every transaction, but common charges include: 

• Appraisal fee: Pays a licensed appraiser to determine the home’s market value for the lender. 
• Home inspection: Optional but recommended for assessing the home’s condition. Specialized inspections (pest, sewer, radon) may be separate. 
• Credit report fee: A small charge for the lender to pull your official credit history for the loan application. 
• Origination and underwriting fees: The “administrative” costs charged by the lender for the work involved in processing, evaluating, and approving your loan. 
• Discount points: An optional upfront payment to the lender in exchange for a lower interest rate over the life of the loan. 
• Title search and insurance: A title company reviews ownership history and issues policies protecting the lender (and optionally the buyer) against title defects. 
• Survey: A professional measurement that confirms property boundaries if required by the lender or customary in your area. 
• Escrow and settlement fees: Paid to the closing or escrow agent who coordinates documents and funds. 
• Recording fees: Paid to the county to record the deed and, if applicable, the mortgage. 
• Transfer taxes: State, county, or city taxes on transferring property ownership where applicable. 
• Homeowners insurance premium: Often collected upfront. Lenders usually require the first year’s policy at closing. 
• Property taxes: You’ll likely pay a prorated portion of the year’s taxes. They’re often placed into an escrow account. 
• Private mortgage insurance (PMI) or upfront mortgage insurance premium (UFMIP): Applies to certain loans with low down payments (less than 20 percent). 
• Attorney fees: Fees for legal counsel to review contracts and oversee the closing process (required in some states). 
• Homeowners association (HOA) fees: If the home is in a managed community, you may owe “membership” transfer fees and a prorated portion of the monthly or annual dues.

Move Into Your New Home With Moving Help

The homebuying process is full of tough tasks, like figuring out what are closing costs. After it’s over and you receive the keys to your dream home, it’s time to move in. But don’t worry, with the Moving Help Marketplace, moving into your new place doesn’t have to be a chore. 

With Moving Help, you can book local moving labor to complete the heavy lifting, so you can sit back and relax. Moving Helpers are experts at loading and unloading, packing and unpacking, and more. 

Browse hourly rates, reviews, and book Moving Help today!