What Every Buyer Should Know About Closing Costs

If you’re preparing to buy a home this year, there’s one key expense that often catches buyers off guard: closing costs. Many know they exist, but few realize how much they vary—or what exactly they cover.

Think of closing costs as the final step in making your home officially yours. They include a mix of fees, insurance, and services that come due when you sign on the dotted line. And depending on where you live, those costs can swing thousands of dollars.

What Are Closing Costs?

Your closing costs are the additional fees and payments you make when finalizing your home purchase. Every buyer has them. According to Freddie Mac, they typically include things like homeowner insurance and title insurance, as well as various fees for your:

• Loan application

• Credit report

• Loan origination

• Home appraisal

• Home inspection

• Property survey

• Attorney

National vs. Local: Why the Numbers Look So Different

When you search for information about closing costs online, you’ll often see a national range, usually 2% to 5% of the home’s purchase price. While that’s a useful starting point if you’re working on your homebuying budget, it doesn’t tell the whole story. In reality, your closing costs will also vary based on:

• Taxes and fees where you live (like transfer taxes and recording fees)

• Service costs for things like title and attorney work in your local area

While the home price is obviously going to matter, state laws, tax rates, and even the going costs for title and attorney services can change what you expect to pay. That’s why it's important to talk to the pros ahead of time so you know what to budget for. It can put you in control before you even start shopping.

To give you a rough ballpark, here’s a state-by-state look at typical closing costs right now based on those factors for the median-priced home in each state (see map below):

As the map shows, in some states, typical closing costs are just roughly $1-3K. In a few places, they can be closer to $10-15K. That’s a big swing, especially if you’re buying your first home. And that’s why knowing what to expect matters.

How to Get a Real Number for Your Budget

If you want a real number to help with your budget, your best bet is to talk to a local agent and a lender. They can run the math for your price range, loan type, and exact location.

And just in case you’re looking at your state’s number and wondering if there’s any way to trim that bill, NerdWallet shares a few strategies that can help:

• Negotiate with the seller. Ask for concessions like a credit toward your closing costs.

• Shop around for homeowner’s insurance. Compare coverage and rates before you commit.

• Check for assistance programs. Some states, professions, and neighborhoods offer help. Your agent and lender can point you to what’s available locally.

Bottom Line

Closing costs are a key part of buying a home, but they can vary more than most people realize. Knowing your numbers (and how to potentially bring them down) can go a long way and help you feel confident about your purchase.

Let’s look at typical closing costs in our area and get you a personalized estimate, so you can craft your ideal budget.