What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing a mortgage, typically ranging from 2 to 5 percent of the loan amount. They include items such as appraisal fees, title insurance, origination fees, attorney fees, recording charges, and prepaid items like homeowners insurance and property taxes. On a $400,000 loan, you can expect closing costs between $8,000 and $20,000. In some cases, closing costs can be negotiated with the seller, rolled into the loan, or reduced through lender credits in exchange for a slightly higher interest rate.