How much are closing costs?

Girl Ninja and I agreed to pay all closing costs associated with the purchase of our first home. Now that we are approaching the final stretch of this purchasing process (we sign papers tomorrow), we’ve received the paperwork that breaks down all these pesky fees. Spoiler alert: It ain’t pretty.

Here’s how those costs break down on our $285,600 loan amount…

    • Loan Origination Fee – $2,856
    • Processing Fee – $795
    • Wire Fee – $25
    • Appraisal Admin Fee – $50
    • Appraisal Fee – $425
    • Credit Report – $33
    • Tax Services – $77
    • Flood Certification – $10
    • Settlement or Closing Fee – $821
    • Lender’s Title Insurance – $649
    • Courier Fee – $50
    • Government Recording Charges – $225

Total Fees: $6,015

But wait…. there’s more!!!!! 

We also have to pre-pay some items…

    • Interest for 15 days – $513
    • Hazard Insurance Premium – $600
    • Hazard Insurance Reserves – $100
    • Property Taxes for Six Months – $1,450

Total Pre-Paid: $2,663

So all said and done we are dropping $71,400 as a down payment, and another $8,678 on fees and pre-paid items.

Or in other words we will be $80,000 poorer once we get the keys. Wowzers.

  1. How much did your closing costs run?
  2. Did you pay them or have the seller pay them?
  3. Remind me why buying a house is a good idea…haha.

p.s. It should be noted that when one negotiates “seller paid closing costs” the buyer is still paying them. I get irritated when people brag that they had the sellers pay their closing costs, as though they’ve negotiated some majestical deal. You agreed to a higher loan amount so you don’t have to pay closing. I agreed to a lower loan amount, but will pay them. It’s just a matter of paying those costs today, or paying them back over 30 years at 4.125% interest. 

37 thoughts on “How much are closing costs?

  1. (1 and 2). I have only bought one house all by myself, the previous one was with my mother. For some reason, I never paid attention to closing costs details. They were mysterious to me. I liken this to having no internet to do any type of research into the nitty gritty aspects of the complex process of buying a home. Also I never read the loan docs I signed and just trusted the lender and signed my life away, mainly there were like 50 signatures and hundreds of pages to go through and I’m sure I wouldn’t have understood any of it. I’m curious if you will read every single page of your docs when you sign away. Basically, I was extremely ignorant of the home buying process pre-internet :/ My current house and the house I had purchased with my mother were brand new builds and the builder “took” care of those costs so maybe there was a reason I never actually “dealt” with them. There seems to be a great deal of give and take when it comes to negotiating a big purchase that is why I’m more concerned with the final “out the door” price than interest rates and monthly payment. However, I am now concerned with every little detail with any major purchase.
    3. The best aspect of buying your own house is it does give you a greater amount of freedom. Living under your parent’s or landlord’s terms are usually are not ideal. For me the best thing about owning our house debt free since 2008 has been the cheap rent, $200/month. The unfortunate factor is that other cheap people are living near me and causing a great deal of grief for my wife and I to the point that we want to move to a “nicer” neighborhood. Still waiting and watching the prices and interest rates skyrocket, you are so lucky to have bought now… I might end up trapped in my home again :/

  2. Our closing costs were about $5000 and we negotiated $3000 paid from seller’s funds at settlement.

    I quickly compared yours to ours and you may want to look into using an alternative Title Agency if allowed. We were able to call a few and pick the cheapest. They don’t seem to really do much except take your money, watch you sign and stamp documents.

    The greatest differences:
    Settlement closing fee $125
    Lenders Title Insurance $100.

    Congrats on the purchase and try to get more excited about paying another chunk of cash to furnish the place the first year!

    • Title insurance is very important because it makes sure the property’s history is free and clear from any ownership problems like liens or past owners who were not properly removed from title. Better to have that insurance if some stranger comes up and claims your property that you just dropped $80k for…

      • Lenders title insurance only covers title insurance for the lender, so make sure you get your own title insurance to cover you also! I’ve used it twice now and was glad I paid the extra money to get it.

  3. Reduce your closing costs (and points if any) by the amount you can deduct on federal taxes, as you can most likely itemize on your 2013 return.

    • I had asked this to be deleted because I was unsure if it was entirely accurate. You may be able to deduct some closing costs, and you can definitely deduct any points. On further research, I don’t believe you can deduct most closing costs.

  4. Oh wow that was even higher than I was expecting to see for the non pre-pay items! This is some great information, as it is extremely difficult to find real examples of actual closing costs. Congrats again on the house, and I’m sure you two will love it. Hoping I’ll be in the same boat within the next 18 months!

  5. Don’t think of it as being $80K poorer. I did the math and figured out that with our original down payment we had purchased a bathroom. You’ve probably bought half a bedroom or kitchen as well! Hope you like the fixtures!!

    Your closing costs look about right to me. I agree you can shop for title insurance, that can vary a lot and most lenders don’t care that much. Each lender generally kicks all their business to particular settlement and title insurance companies and I always got the impression that it’s not for love, but for money. It is definitely in the interest of the bank to do business with certain companies, but it might not be in yours. It depends on how much you trust your lender. I love our most recent one, they came up with great and inexpensive choices for us and I greatly appreciated that!

    It would’ve been to your advantage to settle at the end of the month, less interest to escrow. That’s the only thing that would’ve made a big difference to your cost. For future transactions that can often be negotiated, if you care.

    And I’ve had a seller split closing costs with me, and the seller’s half showed up as a deduction from their settlement sheet. It was never added to my loan. I’m not sure what you’ve heard, but we definitely did not pay the seller’s closing costs on our settlement sheet. We have always paid closing out of pocket to better track the cost.

    Expensive closing costs are why it’s not advantageous to re-finance too often. Many years ago, when the re-fi business was slow, there were lots of $0 closing cost offers. But that’s a rare bird today.

  6. Ok, I checked our files. We last paid $5300 in closing costs on a $240K mortgage (it was a re-fi). We felt it was a great deal at the time.

  7. Sorry to post 3 times, just kept having more ideas.

    I’d look into homeowner’s insurance. $700 for hazard insurance sounds a little high, and only gives minimal coverage. If you get a homeowner’s policy it will replace the hazard insurance.

  8. Lately I have been avoiding this blog because all the house buying woes have come across to me (probably just to me and not others) as First World Problems. Yeah, buying a house is expensive, but you have lots of money, youth, no debt, professional jobs and good health. I think a lot of people would gladly trade places with you.

    • I used to have the same problem with his blog too but have come to realize that he really isn’t trying to be disingenuous. He probably doesn’t eat enough humble pie but how many times must we say we are blessed and extremely grateful for what we have? I’m just happy to live in the age of running water and electricity 🙂

      Also this post is very informative because these transactions don’t usually happen very often so its good to be aware of them.

  9. My closing cost were just under 4k for a 135k loan but fees are more expensive in NY. I paid closing out of pocket. Finally my mortgage is less expensive rent in my area. This is due to living in a small city with 4 respected regional colleges and a large population that is below the poverty line. Section 8 and student borrowing to pay rent distorts the rental market. Also, many of the town around the city won’t issue certifates of occupancy for inlaw suites like you were renting, so no one will rent them out because one disgruntled tenant phone call could result in massive fines if not jail time.

  10. I worked for 3 years reviewing closing docs and such for my employer. Always ask for a good faith estimate document before you go to closing, this gives you time to review and question unknown fees.

  11. BINGO with “seller-paid closing costs.”

    Can you do your own escrow so you don’t have to part with 6 months of property tax at once? Same with insurance? Since you’re going conventional, you might have that option.

    • No, ninja must reimburse the seller a prorated amount of the annual property tax that the seller has paid at time of sale. The only way to reduce this is to buy the house late in the year or before the taxes are due on the property for the year.

  12. Wait a minute…$50 for a Courier fee? I strongly believe you could have had some of those reduced through negotiation (though I have not purchased a home yet). From some of my reading on the subject, a lot of these are simply jacked up fees for things like sending documents in the mail. Similar to being charged for a box of kleenex in your hospital room.

    Gregory Karp writes an excellent article called “spending smart” where he advises negotiating away small or frivolous fees. Of course, it may not be worth your time depending upon your pay grade, but $50 for a “courier fee” is precisely something I would take the time to object.

    • Haha! I used to be a courier for a title insurance company so I can assure you that it probably is not going to be negotiable. It would be difficult to negotiate closing costs in a hot market because you might lose the house over your $50 objection. But more power to you if you do 🙂

    • Not very within the lender. I might be able to shop one or two things, but the big ticket items like processing fee and origination aren’t negotiable. I could find a different lender that has a different fee structure but they probably charge a higher interest rate or couldn’t close as fast as I needed. Since we waived the financing contingency I need to work with a lender that was fair and could close quickly.

      • Mortgage underwriter here: Discount, origination and your rate go hand in hand. I guess I dont know about all banks but my big name bank goes like this (without going into a ton of detail and mtg lingo)….The sales person has a number they need to hit, a pricing number (everyone has to make money-this is how sales people do). Based on the current rates the sales person will use origination and discount points to get your rate where they/you need it. Some people take a higher rate and the lender can help you pay your closing costs (over par pricing), some people take a lower rate and pay origination. These numbers are negotiable but when you start doing that, your rate will move around too. When you lock your rate (at least at my bank) you lock within a range of options, not just one rate. As far as those other fees, I personally can say, there are a ton of parts to this process that most people dont ever see. All those fees do really pay for something 🙂

  13. Friendly landlord here.

    For the love of brownies and all of their gooeyness, ask your lender to waive some of these fees – a credit report fee? A $50 fee to review the appraisal????????????? Walk through the fees; ask which ones they can waive.

  14. Ours was (for a 292k loan (refinance)):
    Orig: 600
    Appraisal: 451
    Credit Report: 22
    Flood Cert; 9
    Interest: 480
    Title: 524
    Sales Tax: 87.78
    Notary: 100
    Recording: 120

    • Why is title insurance necessary for refinancing? Shouldn’t they have thoroughly checked the title when you initially made the purchase?

    • Since we should be comparing apples to apples I pulled out the documents from when we purchased the house. (FHA loan 363k @ 5.375%)
      Orig: 3k
      Appraisal: 550
      CR: 18.26
      Tax Service: 73
      Processing: 595
      Underwriting: 595
      Wire: 22.50
      Closing: 825
      Doc Prep: 65
      Title: 866.65
      Recording: 61
      Mortgage Ins: 6244.75
      Interest: 1192.64
      Homeowner’s Ins: 714
      Taxes: 2103.66

      Now these were paid by the seller from the house sale proceeds so they were included in the negotiated sale price of the house.

  15. Both times we’ve bought a house, we split closing costs 50-50, which is standard in my town. I think it was between 2- $3000 both times. When we sold our first house, the buyer asked us to pay their closing costs of $3500, in addition to our half of the closing costs, which we agreed to. The deal worked in our favor because their closing costs only came out to about $2200 so we ended up with $1300 more than we were expecting.

  16. For a 387K Mortgage in New York we paid about 15K at closing but some of that was from prepaid taxes and a full oil tank. With closing costs like that it always amazes me how people flip houses

  17. I bought a house and the lender I used actually did pay the closing costs. I had already been approved by my bank that I normally use, but the builder of the home offered to match the exact interest rate and everything else in the loan I’d already been approved for if I would just use their lender, so I did. And they paid the closing costs.

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