Keller Williams Main Line
Janis Peterson
Janis Peterson, RealtorĀ®, GRI, ABR, SRES, CSP


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All You Need To Know About Closing Costs

Buying a house involves coming up with a lot more money out-of-pocket than just the down payment. Before getting the keys to your new house, you have to sign for a mortgage, and that means you will need to pay closing costs.

The total cost can come as a blow to many homebuyers who are only expecting to arrange the amount of their down payment. They might not have the additional money, and the deal might not close at all without it.

Thus, clearly estimating the mortgage closing costs can take the mystery out of your home-buying expense, helping you get to the clear bottom line. That’s why we’ve compiled everything that you must know about real estate closing costs in this guide.

What are Closing Costs?

Closing is the interval when the title of the property is transferred from the seller to the purchaser. Real estate closing costs are the charges that you have to pay at the closing of a property deal.  

The most economical way to cover your closing costs is to pay them out of pocket as a one-time expenditure. If the lender allows, you may be able to fund them by folding them into the loan. However, you’ll then have to pay interest on those costs through the life of the mortgage.

What is Included in Closing Costs?

Closing costs differ extensively depending on your location, the property you purchase, and the kind of loan you choose. However, below are nine common charges included in the closing costs for buyers.

  1. Application Fee: This fee covers the cost for the lender to process your application, such as a credit check for your credit score and other administrative expenses.

  2. Appraisal: This fee is paid to the appraisal company to confirm the fair market value of the house. The typical fee of a home appraisal by a certified professional appraiser ranges between $300 and $400.

  3. Attorney Fee: Some states require an attorney to be present at the closing of a real estate purchase. This fee is paid to the attorney to review the closing documents on behalf of the buyer or the lender.

  4. Courier Fee: This fee includes the cost of shipping documents to complete the loan transaction as quickly as possible.

  5. Home Inspection Fee: You may want to hire your own home inspection service to verify the condition of the property and to check for home upkeeps that may be required before closing.

  6. Homeowners’ Insurance: This insurance covers potential damages to your property. You have to pay the first year’s insurance at closing.

  7. Prepaid Interest: Your lender may ask you to prepay any interest that’ll accrue between closing and the date of your first mortgage payment.

  8. Property Tax: Your lender may want any taxes due within 60 days of acquisition by the loan servicer to be paid at closing.

  9. Transfer Taxes: This is the tax paid when the title is transferred from seller to purchaser.

How Much are Closing Costs?

When buying a home, these costs typically run from about 2% – 7% of the purchase price. However, the average closing costs amount to around 3% of the total house price. For example, if you’re purchasing a $300,000 house, your closing costs could be anywhere from approximately $6,000 to $15,000 or even more.

You can't usually borrow these funds because that would increase the buyer's loan ratios to a point where they might no longer be eligible.

Who Pays Closing Costs?

Most of the real estate closing costs fall on the buyer, whether you purchase a home or refinance. However, the seller usually has to pay a few charges too, such as the real estate agent’s commission.

Your lender must outline your closing costs in the Loan Estimate you get when you first apply for the loan. Plus, they should give you a Closing Disclosure statement at least three business days before your closing, which outlines closing fees.

Compare this to your Loan Estimate and ask the lender to clarify what each line item on your closing fees is and why it is required. It’s important to appraise them carefully and ask questions about anything you don’t understand.

Closing Costs Calculator

Calculating the closing costs on a house can be complicated, especially if you’re buying a house for the first time. But, with Main Line Homes by your side, you don’t have to worry. We can help you accurately calculate your expenses so that there are no surprises along the way.

Buying a home is an exciting experience but it can get overwhelming. From finding the ideal property, to applying for a loan, to assessing closing costs, there’s so much to do. That’s where we can come to your rescue.

At Main Line Homes, we leverage the latest industry technologies to enable up-to-date tracking of market listings, empowering you to access newly listed homes as soon as they hit the market. We can help you find homes for sale in Bryn Mawr, Gladwyne, Haverford, and across the entire Mine Line region. Get in touch today!

Janis Peterson, REALTOR®, GRI, ABR, SRES, CSP
Main Line Homes Luxury Real Estate Agent

Keller Williams Main Line
Suburban Square
6 Coulter Ave 
Ardmore, PA 19003 
Direct: 610-642-3744

Whether you're selling your current home or are looking for your dream home, call us at (610) 642-3744 or e-mail for a free consultation.


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