Closing Costs Explained: Who Pays What

Closing costs are the fees — beyond the down payment — that finalize a home sale. For buyers they typically run 2–5% of the purchase price. Knowing what they are helps you budget and spot what's negotiable.

Where closing costs go

  BUYER usually pays              SELLER usually pays
  ─────────────────              ──────────────────
  • Loan/origination fees        • Real estate commissions
  • Appraisal & credit report    • Owner's title policy (varies by area)
  • Lender's title policy        • Portion of escrow (varies)
  • Escrow/settlement (share)    • Transfer taxes (varies by county)
  • Prepaids: taxes, insurance,  • Any agreed credits/concessions
    prepaid interest
  • Recording fees

  (Who pays what is negotiable and varies by California county custom.)

The buyer's main costs

Lender fees — origination and any discount points (Section A of your Loan Estimate; the most negotiable).
Third-party services — appraisal, credit report, title, escrow, recording.
Prepaids & escrow setup — the first chunk of property taxes, homeowner's insurance, and prepaid interest.

How to estimate yours

Your lender must give you a Loan Estimate within 3 business days of applying, and a Closing Disclosure at least 3 business days before closing. Compare them line by line.

Ways to reduce them

Shop lenders — compare Loan Estimates; fees vary a lot
Ask for a lender credit (slightly higher rate in exchange for lower upfront costs)
Negotiate seller concessions — sellers can pay some buyer costs
Shop title/escrow where allowed
Time your closing — closing later in the month reduces prepaid interest
Review the Closing Disclosure against your Loan Estimate for surprises

Resources

Closing-cost customs vary by state and county. Your agent, lender, and escrow officer can give you an estimate tailored to your transaction.