Seven Steps to Saving For a House This Year - Quicken Loans Zing Blog

When it comes to saving money to buy a home, you’ve probably been pretty focused on the down payment. But you’ll also need to plan for closing costs, which are due when your loan closes.

Some closing costs, such as the commission paid to the listing’s real estate agent, are typically paid by the seller. Other costs, such as a title search, title insurance, lender costs and homeowner’s insurance, are typically paid by the buyer.

Of course, there’s always room to negotiate – but choose your battles wisely. A seller will be much more open to negotiate when facing an offer of the full asking price or in a buyer’s market. Another option for these costs is to meet the seller halfway, dividing expenses between both parties.

How Much Are Closing Costs?

How much you’ll pay in closing costs varies according to the amount of your loan and tax laws in your area, but you can roughly expect to pay 3% – 6% of the purchase price. So, if you’re buying a $300,000 house, your closing costs could range from $9,000 – $18,000.

You’ll pay higher closing costs if you choose to buy discount points, but the trade-off is a lower interest rate on your loan. A point is actually prepaid interest on the loan. Typically, one point costs 1% of the loan amount. The more points you pay, the lower your interest rate. If you plan to stay in your home for a while, paying points may be a smart way to pay less in interest over the life of the loan. If you’re interested, ask your lender for options on paying one, two or more points.

Finally, if you’re short on cash, ask your lender about a no-closing costs mortgage, where your closing costs are added to the loan amount. You won’t pay as much up front, but you will increase your monthly mortgage payments and likely pay more interest over the life of the loan.

Costs to Expect

By law, lenders are required to provide a loan estimate within three days of receiving your application. The estimate provides a detailed list of your closing costs, which would normally include:

  • Appraisal: This will be mandated by the lender to make sure the home is worth the sales price. Most appraisers charge $300 – $500 for their services.
  • Title/attorney fees: This includes necessary government filing fees, escrow fees, notary fees and other expenses related to transferring the deed. The cost of title and attorney fees varies significantly from state to state.
  • Escrow fees: You may have to pay portions of property taxes and insurance upfront into an escrow account.
  • Lender fees: This covers items ranging from administrative costs and pulling your credit report to wire transfer fees. If a lender boasts incredibly low rates, it’s possible they will try to make up the difference with additional lender fees, so be sure to compare apples to apples. Check out this video for an understanding of the difference between base mortgage rates and APR.
  • Loan interest: You’ll need to pay interest on the loan prorated from the closing date to the first of the following month.
  • Flood certification: If your house is situated on or near a flood plain, your lender may require documentation confirming its status, which involves paying around $15 – $20 for a certification from the Federal Emergency Management Agency (FEMA).

What’s Negotiable?

The loan estimate will help you understand what closing costs to expect and which you may be able to lower. You should ask the lender about fees you may not understand, or think could be lowered.

Lenders will schedule an independent appraisal by a qualified appraiser not affiliated with the lender or anyone else party to the mortgage transaction. There’s typically a set cost associated with appraisals based on the loan type and the area you’re in. However, other items like title insurance, pest inspection and the settlement agent may be open to negotiation. Of these fees, you’ll save most on title insurance and settlement (which are sometimes combined). But if you’re planning to comparison shop for title and settlement, do so quickly because these services take time.

Also, watch for miscellaneous fees like funding and delivery fees. If the fees seem vague, you may be able to push back to have them lowered or eliminated.

Closing Your Loan

Your escrow officer, title company or real estate agent will let you know when your loan is scheduled to close. Three days prior to the closing, you should receive your closing disclosure, which provides final details about your loan and closing costs. Compare these costs carefully to your loan estimate and make sure any changes you’ve agreed to with the seller are reflected in the final document.

On your closing day, you’ll need your state-issued photo ID and a certified or cashier’s check for the amount you owe. After you’ve signed all the documents and paid, your loan will be closed and you’ll walk away with the keys to your new home!

Questions? Contact a Home Loan Expert today or give us a call at (800) 785-4788. You can also feel free to leave us a note in the comments below.

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This Post Has 46 Comments

  1. I’m a 2 weeks out from close two things I wish I would of known as I was comparing lenders:
    Prepaid Items: currently 12 months of property tax is listed (8k) with quicken (I have a call into my loan specialist) . On my past 2 houses purchased this was never a cost at close.

    The 4 months of property taxes for escrow is separate … I have no idea why quicken needs 16 months of propert taxes 🤷🏻‍♀️. Apparently this is an item you could NEGOTIATE.

    2 when your 1st payment is due typical it is the 1st of the month following a 30 day waiting period (you close on 1/25, your 1st payment is 3/1). Quicken you pay interest till the current month then the payment is due (you close on 1/25 payment due 2/1).

    Both of these can cost you and should be discussed before you choose your lender. I wish I would of. I thought these 2 things were standard since my last 2 loans were with well known banks.

    1. Hi Chris:

      I’m going to have someone from our Client Relations team reach out to look into your experience. Every situation is different when it comes to taxes. You do need some money to set up the escrow account, but we can check into your situation. They’ll also be able to go over the other issue. Thanks for reaching out and have a good day!

  2. My loan is 105,000 but I had to pay over 10,000 for Closing cost. It’s 10% of loan amount, not 3-6%. Please check it.

    1. Hi Xuan:

      The closing cost estimates in this article are based on an average range. They’re not representative of every loan situation. Policies may also vary by lender. Thanks for reaching out!

  3. I was charged an appraisal fee by Quicken prior to starting attorney review but when I went to hire a lawyer he told me that it is against NJ law for a mortgage company to collect an appraisal deposit prior to attorney review. Is this true?

    1. Hi Rosie:

      I’m going to go ahead and get this to our Client Relations team. I can tell you that your deposit can be used toward closing costs in general. Thanks for reaching out!

  4. Hello its so unfortunate that the people behind the scenes selling me refinance never once mentioned this site to me so that i could tweek my loan estimate. Im need to keep faith that today things will be resolved with my final loan numbers a discrepancy olf 1092 bucks lost on tthe loan mumbers. Can someone call me ? Olga

    1. Hi Olga:

      This article isn’t meant for making tweaks to your loan estimate, but instead to give you a ballpark idea of what you might pay for at closing and what it might cost. Everyone’s loan is different. That said, I’m going to go ahead and have someone reach out. I’m also removing your phone number because this is a public website.

  5. I don’t understand why my closing cost is $18,000.00. Also why do the sellers have to pay the closing cost? Please explain. Thank You

    1. Hi Anna:

      While sellers may pay for certain closing costs, that’s something that’s negotiable between buyer and seller. As far as your personal closing cost, I see you working with us, so I’m going to have someone reach out to explain how things are currently structured and go over any options we may need to discuss before your loan closes.

    1. Hi Darby:

      I’m going to have someone reach out, but a variety of factors can impact your rate including your credit score, the amount of your down payment and the number of prepaid interest points you’ve paid among others. Here’s an article that breaks it down.

  6. My refinance estimate came back with 2.8% in points for origination charges and a total of $7,000 at closing. This is outrageous. I was told you can come down on points if the interest rate raises, but my interest rate is already high.

    1. Hi Chris:

      I see that you’re working with us, so I’m going to have someone go ahead and reach out to go over your situation and but for any potential opportunities. That being said, there are many factors that affect both your closing costs and your rate. The number of points you have is just one of those factors.

      Thanks,
      Kevin Graham

  7. My loan number is In your “Here’s How Your Numbers Work”, Under items you own at closing.” You list under Loan Costs $5,557,72. This seems very high and may be inaccurate. I have already issued checks to the listing agency of $500. Another check to Quicken Loans for $500 for an appraisal fee. I have also issued a check to Integrity Home Inspections for $450.00. What other fees am I being charged by Quicken Loans to make the Loan Cost (D) $5,557.72. Does this figure include my FHA down payment of 3.75%? Or are there other hidden fees and what exactly are they? Also, what exactly are my prepaids & Escrows (F&G) They seem rather high. Finally why am I paying $521.00 for Other (H)? What Other fee am I paying? Am I being nickeled and dimed. Please be very specific in your explanations at $5,557.72 seems very high on a $77,600 home purchase. Is there any flexibility in these payments, as I am a repeat Quicken Loans mortgage customer?

    1. Hi James:

      It’s not our intention to hide fees from you. Every situation is different, and there are some details in here that are very specific to your personal situation. I’m going to get this to our client relations team so someone can reach out and give you a full explanation.

      Thanks,
      Kevin

      1. I am having the same issue, i just received my loan estimate and i am being asked to pay $7151 at closing on a $72000 loan. Your website states 2-5% is the rate for closing fees. Why am i being asked to pay over 10%, this is insane.

        1. Hi Christopher:

          Every situation is different, and closing costs vary. I’m going to have someone reach out to give you a full explanation of any fees and go over your options. Thanks for reaching out!

    2. Wish some of these issues were explained online so we could all know. I’m sure it would be easier than calling everyone who reads this. 🙂

      1. Hi Kenneth:

        When it’s general information, we will explain here. The problem with the lending process is that everyone’s situation is different and to give a definitive answer, a lot of the time, the only good way is to get on the phone or in a chat with someone and talk it out. Different states also have different regulations, so we want them to talk to someone who is licensed to give them advice in their state. The trade-off is that we sometimes can’t say as much publicly. I totally understand where you’re coming from, but that’s why we answer some of these things the way we do. Have a good day!

  8. Hi,
    I have a question for you, if I have $40k to purchase a home with a 20% down, on a fix rate loan and would like to borrow more money for a 350, 000 home – only having 40K down, can this be done, without getting another type of loan that its not the 30 year fix conventional loan?

    Thank you,
    Jesus

    1. Hi Jesus:

      This can absolutely be done. You don’t have to put down 20% to get a 30-year fixed conventional loan. The only thing to be aware of is that you’ll pay for mortgage insurance until you reach 20% equity. You can avoid a monthly mortgage insurance charge by taking a lender-paid mortgage insurance option like PMI Advantage. You take a slightly higher rate to avoid the monthly charge with these types of programs. Otherwise, you can pay for the mortgage insurance on a monthly basis yourself, but you can get a conventional loan with as little as 1% down if you wanted, so the down payment you have is fine.

      If you would like to look into your options, you can get preapproved online through Rocket Mortgage. If you’d rather get started over the phone, one of our Home Loan Experts would be happy to talk to you at (888) 980-6716. Hope this helps!

    1. Hi Becky:

      I’m going to send you an email to make sure you’re not working with us. I don’t see a record in our system based on your email address. That being said, I can say in general that costs on loans can change. However, once you get an official loan estimate, there are strict limits on how much they can go up. That does seem like a steep increase, but if you switched loan programs or the appraisal came back low and all of a sudden you didn’t actually have enough equity to refinance, then your closing costs might change like that. We would be happy to look in your situation if you call (888) 980-6716. Hope this helps a little!

      Thanks,
      Kevin

    2. I hope this is not typical because the same thing happened to me… what a coincidence… my quote went up 4K as well… I was quoted around 5K and now it shows 9K. I’m looking into it. Good luck.

      1. Hi David:

        I see that you’re working with us. I’m going to have someone reach out to go over your options and see if we can keep you on track.

        Thanks,
        Kevin Graham

    1. Hi Lynn:

      I’m going to have someone reach out to you about this. Have a great day!

      Thanks,
      Kevin Graham

    1. Hi John:

      We can definitely have someone reach out and help you look into your closing costs. They’ll be in touch.

      Thanks,
      Kevin Graham

  9. Hi can anyone please tell me when and to whom closing costs would be paid in a quicken loans Fha loan? Are they paid the day of closing or or they sent ahead prior to closing?

    1. Hi Brooklyn:

      I’m going to have someone reach out to you regarding our closing process and the way it works. They’ll be in contact.

      Thanks,
      Kevin Graham

    2. Do Purchase Money Mortgages from lending institutions allow for construction of a new home as well? My wife and I located a piece of property to buy. We plan to build a new home, and would like to consolidate the financing if possible. A co-worker told me that he purchased property upward of $125,000, followed by a purchase a modular home for $250,000, and his bank assigned a Partial Purchase Money Mortgage. He said the total sum of the mortgage borrowed was $375,000, $125,000 being purchase money, and the remainder being future advances. I am also told by others to consider a construction/ permanent loan, where the initial construction cost will cover the land purchase. I really need some guidance, thank you.
      Robert

      1. Hi Robert:

        We don’t do loans for new construction, unfortunately. Your questions would be better directed at a lender that specializes in this type of transaction. I don’t have any specific recommendations, but I would imagine a Google search might bring up plenty of results for these lenders.

        Thanks,
        Kevin Graham

          1. Hi Jason:

            Sorry we missed this one. That’s something you can certainly speak with one of our Home Loan Experts about. You can get in touch with them by filling out this form or calling (888) 980-6716.

            Thanks,
            Kevin Graham

  10. Why is there such a huge gap of costs for every closing cost charge.
    I guess this gives quicken the advantage & option of charging whatever they choose, which would most likely be the higher charge for the majority of services!
    If so, time to move on to another Lender!

    1. Good afternoon, Bonnie. We’d like to get some more details about your situation, so I’m going to have one of our Client Relations Specialists reach to you to get some more information.

  11. Where are the lender fees, I guess you don’t want to disclose it upfront for fear of driving away business. I bet it is not very competitive.

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