Understanding closing costs

Origination fees, underwriting fees, processing fees, these are the lender's cut. Together they typically run 0.5–1% of the loan amount. They are absolutely negotiable, especially if you're working with a broker who can shop your file.

Discount points are different. A point is a fee you pay up front (1% of the loan) to lower your interest rate. Whether they're worth it depends on how long you plan to keep the loan.

The appraisal, credit report, and any required inspections (pest, well, septic) fall here. The lender orders the appraisal but you pay for it. Cost: $400–$800 typically.

By federal law, you can shop for some services, like title insurance and escrow in many states, even if your lender quotes them. Compare three providers before signing.

Title insurance protects against ownership disputes. There's a lender's policy (mandatory) and an owner's policy (optional but strongly recommended). In California, the seller often pays the owner's policy by custom, but it's negotiable.

Escrow companies are the neutral third party who hold your earnest money and disburse funds at closing. Their fees are usually a percentage of the price.

Recording fees, transfer taxes, and any required tax stamps are set by your county and state. Not negotiable.

These aren't really fees, they're future expenses paid up front. Examples: 3 months of property tax escrow, a year of homeowner's insurance, a few weeks of mortgage interest from closing to your first payment.

You'd pay these eventually anyway. They feel like closing costs because they're due at closing, but they're prefunding your house's first months.

After you have a Loan Estimate, every section labeled 'B' (services you may shop for) is fair game. Get quotes from two competitors, then ask your lender to match the best one.

Use our closing cost calculator to ballpark the total before you've narrowed down a property, it'll save you sticker shock at the table.