What Every First-Time Buyer Should Know About Closing Costs

haakerteamco
Sep 23
2 min read

Buying your first home is exciting, but many first-time buyers are surprised when they learn about closing costs. These are the fees and expenses, beyond the down payment, that you’ll need to pay at the end of the homebuying process to officially transfer ownership. Understanding what to expect will help you avoid last-minute stress and budget with confidence.

What Are Closing Costs?

Closing costs are a collection of fees charged by your lender, title company, and other parties involved in the home purchase. On average, they range between 2% and 5% of the home’s purchase price. For example, if you’re buying a $250,000 home, your closing costs could be between $5,000 and $12,500.

Common Closing Cost Items

Some of the most typical fees you’ll see include:

Loan origination fees – charged by your lender to process your mortgage.
Appraisal and inspection fees – to confirm the home’s value and condition.
Title search and insurance – to ensure the property is free of liens and legally yours.
Attorney fees (in some states) – for legal review of your documents.
Prepaid costs – such as homeowner’s insurance, property taxes, and interest.

Who Pays Closing Costs?

In most cases, the buyer pays the majority of closing costs, but sellers may cover certain fees to make the deal more attractive. You can also negotiate seller concessions where they agree to cover part of your closing costs.

Tips for First-Time Buyers

Budget early – Ask your lender for an estimate of closing costs before making an offer.
Shop lenders – Fees can vary, so compare offers.
Negotiate with the seller – Especially in a buyer’s market, sellers may help cover costs.
Look into assistance programs – Many states and local programs provide grants or loans to help first-time buyers cover closing costs.

The Bottom Line

Closing costs may feel overwhelming, but being prepared makes the process smoother. Work closely with your lender and real estate agent to understand exactly what you’ll need to pay and when. With a little planning, you’ll walk into closing day with confidence—and keys in hand.