What Are Closing Costs for a Buyer?

As a potential homebuyer, you know you have to save for a down payment, consider interest rates, and worry about the competitive housing market.

You can be prepared for the process and still be in for a surprise at closing time when you hear how much you need for closing costs.

What are closing costs for a buyer? How much do these closing costs run?

Read on to learn more about closing costs and what you can expect to pay in a traditional real estate purchase.


Who Pays Closing Costs?

First, it makes sense to know who is responsible for paying closing costs. Often, the buyer is responsible for the brunt of the costs at closing.

Sometimes, a buyer can negotiate with a motivated seller and get them to cover part of their closing costs as part of the terms of the sale.

Sellers also pay some costs at closing to their realtor and often some costs in taxes and transfers.

What Are Closing Costs for a Buyer?

The buyer is the one who will pay the brunt of the closing costs. These are typically one-time fees associated with the transaction of buying a home.

Closing costs can vary depending on who’s handling the financing of your home. Many buyers will shop for mortgage brokers to find one with lower fees at closing.

One-Time Closing Costs for Buyers

Closing costs amounts are typically one-time fees associated with all the things that must happen for the transaction to move forward.

These are fees for things like:

  • Lender fees
  • Prepaid interest
  • Appraisals
  • Titles
  • Origination fee
  • Application fee
  • Escrow or closing fees
  • Tax service fees
  • Wire fees
  • Notary fees
  • Courier and delivery fees
  • Attorney fees
  • Recording fees
  • State, county, or city transfer taxes
  • Home protection plans
  • Natural hazard disclosures

It’s worth noting that it’s wise to shop around when seeking a mortgage. The highest cost for closing comes from the fees associated with the lender.

Other Closing Costs to Be Aware Of

There are other closing costs to be aware of and prepare for. Often these closing costs are prepaid costs that will become recurring costs once you’re in the home.

This might include things like:

  • Property taxes
  • Homeowners insurance
  • Mortgage insurance

It’s common practice to collect these fees for the first year up-front at closing and then get billed for them after or have them become part of your monthly mortgage payment.

Saving on Closing Costs

Once closing costs are explained, you might wonder if buying or selling a home is really something you can afford. It certainly adds to the associated costs.

Of course, as a buyer, you can negotiate the largest chunk of costs with your lender.

As a seller, you might look for a cash buyer who advertises with we buy homes. Using this route gets you cash and avoids the many fees associated with buying or selling.

Closing Costs for a Buyer

Understanding what are closing costs for a buyer is an important part of the home-buying process. You want to be prepared for costs that add to your overall expenses at purchase time.

For more articles like this one, check out our real estate section.


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