What Every Homebuyer Should Know About Closing Costs and Hidden Fees Before You Sign

Most buyers spend months planning for their down payment—but closing costs? Those can fly under the radar until the very end.

From loan processing to title work to last-minute “surprise” fees, closing costs can add thousands of dollars to the true price of buying a home. So how much should you expect to pay in closing costs? What do these fees actually cover? And how can you avoid being blindsided at the closing table? Here's what to know about the real—and not-so-obvious—cost of closing on a home.

What are closing costs?

Closing costs are fees paid when finalizing a home purchase. They include mortgage-related charges like loan origination and underwriting, as well as services such as appraisal, title search, and legal filings. The exact costs vary by mortgage type, location, and sale details.

How much are closing costs?

Closing costs are typically 2% to 7% of a home’s purchase price. So, on a nationally median-priced home of $449,000, closing costs could range from $8,980 to $31,430.

Both buyers and sellers usually incur their own closing costs, and the responsibility for these fees can be negotiated within the purchase agreement. It’s important to remember that closing costs are extra expenses beyond the down payment, which typically ranges from 10% to 20% of the home’s purchase price and is also paid at closing. For a home priced at the national median, buyers may need between $53,880 and $121,230 in available cash to complete the purchase.

What’s included in closing costs? A line-by-line breakdown

When you buy a house, you’re not just paying for the property, you’re also paying for the services that facilitate the purchase. You might be surprised to learn about all of the labor that goes into a home sale, and even more shocked to see the sticker price.

Common buyer closing costs:	Common seller closing costs:
Application fee Appraisal fee Attorney fees Buyer’s agent commission Credit report fee Escrow fees Inspection fee Loan origination fee Prepaid property taxes and homeowners insurance Processing fee Recording fees Title search and insurance Underwriting fee	Attorney fees Mortgage payoff Property taxes Seller’s agent commission Seller concessions Transfer taxes

Are closing costs tax-deductible?

Most closing costs for buyers aren’t tax-deductible, but certain homebuying expenses are. You can deduct mortgage interest, discount points paid to the lender, and property taxes if you itemize deductions on your tax return. These deductions are especially valuable in the early years of homeownership, when interest payments are highest. Consult a tax professional to determine your eligibility for homebuying-related tax deductions

The hidden and overlooked fees no one tells you about

Even if you’ve reviewed your loan estimate closely, some real estate transactions come with surprise fees that surface only late in the process, sometimes just days before closing. Some agents might recommend planning for “buffer” costs—miscellaneous fees not itemized early on—that inflate your final bill.

These hidden closing costs can cover myriad expenses, from move-in charges to management fees, and rush expenses for preparing necessary documents. And then there’s the issue of junk fees—vague or excessive charges (think document prep or processing fees) that are worth questioning. If something doesn’t make sense or seems inflated, ask your lender or agent for a breakdown.

How to prepare for closing without surprises

To avoid surprise closing costs, ask early and in writing about all fees from everyone involved, then review them with your lawyer. Always keep a financial cushion, as unexpected expenses can arise—even in "no closing cost" deals.

Read full article: realtor.com

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