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  4. Closing Costs: What They Are and How to Avoid Them
For anyone who is looking to refinance or buy a home, closing costs are a burden. Having to save up close to $5,000 or more is a pain, and a drain on your money. So why is closing so expensive? Why do some companies require a deposit? And most importantly, how do you get out of having to pay that much upfront?

Contrary to popular belief, closing costs don’t all go to your lender. For your own customized breakdown of what you need to pay for at closing, ask your banker for a Good Faith Estimate. In general, closing costs include the following:

  • Appraisal ($225 – $450)
  • Credit Report ($15 – $30)
  • Closing Fee ($150 – $400)
  • Title Company, Title Search or Exam Fee ($150 – $400)
  • Survey Fee ($150 – $400)
  • Flood Determination/Life of Loan Coverage ($15 – $25)
  • Courier Fee ($30)
  • Title Insurance (Lender’s Policy) (Varies – generally between $175 – $875)
  • Title Insurance (Owner’s Policy) (Varies – generally between $175 – $875)
  • Homeowners’ Insurance (Varies – $300 and up)
  • Buyer’s Attorney Fee (Not required in all states – $400 and up)
  • Lender’s Attorney Fee (Not required in all states – $150 – $500)

Check out Closing Costs and Fees Explained for more details on how and why each portion is necessary.

Because of the costs mentioned above, mortgage companies need to ensure a commitment from the client before moving forward on a loan. To do this, deposits are often required to cover these costs when the client decides against the loan midway through.

So how do you get out of having to pay thousands upfront? Seller concessions are a set dollar or percentage amount of the purchase price that the seller agrees to pay you. In other words, you can agree to bid a little higher, but the seller has to pay your closing costs. This way, the amount you bid will of course be part of the loan, while closing costs are paid by the seller. For FHA loans, seller concessions can be up to 6% of the loan amount, so be sure to check and see if this option is available for your loan program.

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This Post Has 4 Comments

  1. I’m
    A widow & doing a refinance of my mortgage for the first time, I’m having a hard time to talk to my loan processor & they want to communicate thru email only but I like all communication by paper as I don’t have a printer, I’d like to know the steps in refinancing.
    Also instead of cash out I would like to pay $20,000 to lower my refinance amount of my balance to lower my monthly payments.

    1. Hi Leticia:

      I’m going to get this to our team. Although electronic communication makes things faster, we should be able to work within your preferences.

    1. Hi Billy:

      It’s very hard for me to tell you anything definitive on what your closing costs might be because it changes with every loan depending on loan amounts and the way the loan is set up. We also have the option of rolling closing costs into the loan in many cases. The one thing I can recommend is that you speak with one of our Home Loan Experts. They’ll be able to go over your situation much more thoroughly and discuss all of your options. You can get in touch with them at (888) 980-6716. Hope this helps!

      Kevin Graham

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