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How Much Are Mortgage Closing Costs?

After going through a lengthy pre qualification stage, you’ve finally gotten to the closing side of the mortgage. But there’s still a lot to understand. If you’re a first-time borrower, you’re probably asking, “How much are mortgage closing costs?”

The mortgage closing costs range to around 3%-6% of the property purchase price. For example, if you buy a house worth $300,000, you’ll have to pay around $9,000-$18,000. Your closing fees will depend on the home’s value and additional expenses that come with it.

We’ll give you information on utilizing the mortgage closing costs throughout this article. In addition, we’ll help you see what makes up the closing costs and how you can get yours at a lower rate.

That way, you can enjoy your new property at a reduced cost.  

How Much Are Mortgage Closing Costs

How much are mortgage closing costs? A percentage charges your mortgage closing costs. How much that percentage varies upon the lender and the type of mortgage loan. But most of the time, you can expect to pay 3%-6%.

Here is an example of Rocket Mortgage closing costs.

To explain, closing costs are the small fees that a homebuyer makes when initiating or closing a real estate mortgage. The most common forms of closing costs are loan refinancing or buying a new home. 

Closing costs use a mixture of property fees, insurance fees, title fees, and lender fees. The lender has to give a borrower a mortgage closing cost estimate. It has to be signed through a closing disclosure or a loan estimate document for further verification.

Closing costs do not factor in the down payment. On some occasions, you’ll have to negotiate with your seller to pay for a portion or the entirety of your closing costs. 

Once the loan gets to the closing cost phase, both the seller and borrower pay for the closing costs. However, the buyer is the one who pays for most of the costs. If you’re going to negotiate with the sellers via seller concessions. 

You should use the seller concessions tactic if you have difficulty paying the closing fees. The sellers have limits on their offering for closing costs. They can only give a certain portion to the mortgage value. This can vary based on a down payment, occupancy, and loan type. 

Also, sellers have to pay their closing costs during the deal process. For instance, the seller has to pay:

  • Transfer taxes
  • Real estate taxes
  • Loan estimate
  • Closing disclosure

In addition, the lender pays extra costs such as title preparation fees or real estate commissions. Ultimately, it boils down to what the buyer and seller agree to. But if you’re planning on refinancing, you must pay for the entire closing costs. 

How Can You Calculate The Closing Cost?

HOA Fees

HOA fees occur for condo homeowners that they pay monthly. HOA rules for issues such as home design and maintenance. In some places, this is an upfront fee. So check with your state and local HOA laws to see how it will affect your final closing cost. 

Federal Loan Fees

If you have less than a 20% downpayment, then you’ll have access to a federal loan program. This includes the US Department of Agriculture, Federal Administration, and Veterans Affairs. This requires you to pay for a mortgage premium or a document of default protection. 

Home Inspection Fee

When you get someone to view a property, they’ll want around $300-$500. The certified home inspector evaluates the property and views any potential problems. With the help of a home inspector, you’ll see potential repair costs on the property.

Credit Report Fee

If the lender has to make a hard pull on your credit, they are doing this to see if you are worthy of the mortgage. This can cost around $15-$30. On some occasions, the lender won’t charge a fee because the reporting agencies give them a discount. 

Escrow Fees

When your closing costs need a 3rd party to manage them, it can cost around $300-$1,000. This process has an escrow agent help get the account closed quickly and manage the entire process. 

Appraisal Fee

The Appraisal fee is where a certified appraiser evaluates your target property. When doing so, they find its property market value. This is around $300-$400. 

Because of these many factors, it’s important to look at all the costs when seeking a mortgage. That way, you’ll have a better grasp on the mortgage closing costs and get an offer that’s in your budget. 

Can I Reduce My Closing Costs?

Compare Closing Costs

As a borrower, you have the right to shop around for the lender with the most affordable closing costs. This gives you multiple options and allows you to find a better service. To get the best results, take time to research and look around for cheaper options. 

When looking around, don’t just view the interest rate. Ensure that the lender doesn’t charge a high price for the mortgage over time. 

Cheaper Homes

Did you know that you can have fewer closing costs by buying a cheaper home? You can pay less money on your down payment when paying for a cheaper property. Because of this, you’ll have more cash for your closing fees. 

Time the Closing

Closing costs have a daily interest to take up for the interest costs that are within the loan. This occurs during the time the first mortgage payment is made.

If you time your mortgage closing at the end of the month, you’ll lower the prepaid interest and lower the fees you owe.  

Negotiate With Your Lender

Sometimes you can get your lender to reduce the closing costs. You’ll need to show closing credit, which shows that the seller will give you money to cover the upfront fees during the closing. 

Lenders tend to have strict guidelines on what credit you must have. If you might need financial assistance to help pay for the closing costs, now is the best time. That way, your lender will give you a better rate and help make the closing process easier. 


To conclude, mortgage closing costs can range from around 3%-6% of your home’s total prices. While there are multiple ways to reduce the costs, it’s better to budget extra aside to play for anything unexpected. So think about your closing costs before taking out a mortgage to ensure you’ll get the most out of your loan application.