Closing costs are the fees and prepaid items due when the loan is finalized. They typically range from 2% to 5% of the loan amount and cover lender charges, title insurance, appraisal, recording fees, prepaid interest, and the initial escrow deposit for taxes and insurance. On a $400,000 purchase, that can mean $8,000 to $20,000 due at the table, although some of those items can be paid by the seller or rolled into the loan in certain situations.
The Loan Estimate you receive after applying lists every expected cost in a standardized format. Three business days before closing you receive the Closing Disclosure, which should match closely. Compare the two documents carefully. Legitimate changes can occur, but large unexplained increases should be questioned. Some fees are fixed by third parties; others, such as the origination fee or lender credits, are negotiable.
When shopping lenders, ask each one for a full Loan Estimate on the same loan scenario so you can compare total costs, not just the interest rate. A slightly higher rate with significant lender credits can sometimes produce a lower cash-to-close amount. Use the mortgage calculator to see how different rate-and-fee combinations affect the long-term cost of the loan.
In competitive markets some sellers still contribute toward buyer closing costs. Down-payment assistance programs may also cover part of the expense. Planning for the full amount from the beginning—and shopping for the best combination of rate and fees—keeps the final numbers from becoming an unwelcome surprise on closing day.