Think your down payment is the only upfront cost? Let’s break down the full picture—so you can close with confidence and no surprises.
One of the most common shocks for first-time homebuyers isn’t the monthly mortgage payment—it’s the closing costs. These one-time expenses, due when you finalize your home purchase, can add up quickly and affect your overall budget if you’re not prepared.
In 2025, with home prices and service fees varying by location, understanding your total closing costs—and how to reduce them—is a crucial part of the mortgage process.
What Are Closing Costs?
Closing costs are the fees and expenses—beyond the down payment—required to complete your home purchase.
Common Items Included in Closing Costs:
- Loan Origination Fees – Charges from your lender for processing the loan
- Appraisal Fee – Paid to a licensed appraiser to confirm the home’s value
- Credit Report Fee – For pulling your credit history during underwriting
- Title Insurance & Title Services – Ensures your ownership is protected
- Escrow Fees – Paid to the neutral third party managing the transaction
- Prepaid Costs – Including property taxes, homeowners insurance, and interest
- Recording Fees – Charged by your local government to make the purchase official
Who Pays Closing Costs?
While the buyer typically pays most closing costs, some may be negotiable. Sellers may contribute as part of the purchase agreement, and some loan programs allow lender credits in exchange for a slightly higher interest rate.
How to Reduce or Manage Closing Costs:
- Ask about lender credits or closing cost assistance programs
- Compare fees from different lenders
- Request a Loan Estimate early to understand all fees in advance
- Consider negotiating seller contributions in your offer
Pro Tip: You’ll receive a Closing Disclosure at least three business days before closing. Review it carefully to confirm all costs match your expectations—and ask your loan officer to walk through it with you, line by line.
Want to understand your total upfront costs before you make an offer? Our team will provide a personalized estimate and walk you through how to reduce or plan for every dollar.
Contact our Sales team for your customized closing cost breakdown.
Lending Act. Closing costs vary by loan type, property, and location. This content is for informational purposes only and does not constitute financial, tax, or legal advice.
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Disclosures: LoanWorks, Inc. is a mortgage broker licensed in multiple states. All information provided on this blog is for general informational purposes only and does not constitute an offer to lend or a commitment to approve any loan. Loan terms, rates, and eligibility are subject to change without notice and may vary based on creditworthiness, property type, and other factors. Not all applicants will qualify.LoanWorks, Inc. does not guarantee approval, rate, or term and does not make any express or implied claims about the availability of specific programs or products.
By refinancing an existing loan, total finance charges may be higher over the life of the loan. Always consult with a licensed LoanWorks representative for details specific to your financial situation.
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