Closing Costs
The collection of fees charged to finalize your mortgage and transfer ownership.
Definition
Closing costs are the lender, title, escrow, recording, and prepaid fees paid to complete a mortgage transaction.
Category: Closing
What’s usually included
Closing costs commonly include lender underwriting fees, appraisal, credit report, title insurance, escrow fees, recording charges, prepaid property taxes, homeowners insurance, and daily interest collected before your first payment starts.
Typical range
For most purchase and refinance loans, closing costs land around 2% to 4% of the loan amount. The exact number depends on your loan size, location, title fees, and whether you choose to pay points.
How to compare offers correctly
Focus on the combination of rate and fees, not just the advertised interest rate. A lower rate can cost more upfront if the lender is charging discount points or weak lender credits.
Related glossary terms
- Cash to Close - The final dollar amount you need to wire or bring to closing.
- Loan Estimate - The early disclosure that outlines a mortgage offer's rate, payment, and fees.
- Escrow - A third-party process or account used to handle funds securely during and after closing.
Related loan programs
- Conventional Loans - Conventional loans aren't backed by a government agency, follow Fannie Mae and Freddie Mac guidelines, and reward strong credit with the lowest rates and most flexible terms available.
- Refinance Loans - Refinancing replaces your current mortgage with a new one — to lower your rate, shorten your term, switch loan types, or pull cash out of your equity. The right refinance depends on your goal, not just current rates.
- HELOC - A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. You draw funds as needed during the draw period and repay flexibly — like a credit card backed by your house.