If you are new to the buying and mortgage process, closing costs are not familiar to you. When buying a home, there are charges and fees which you need to be aware of. While some extra charges are negotiable, the cost of closing is not.

What Are Closing Costs?
Closing costs consist of a variety of smaller charges. Your lender is required by law to give you a good faith estimate of these charges, along with a detailed explanation of each. But please keep in mind that it is only an estimate.

Closing costs may vary based on where you live and the property you buy. Here are some things often included in the closing costs:
• Credit report fee (for running your credit report)
• A loan origination fee (lenders’ charge for processing the loan paperwork)
• Discount points (fees you pay in exchange for a lower interest rate)
• Underwriting fee (covers the cost of evaluating a mortgage loan application)
• Attorney’s fees.( if you use one)
• Title insurance (protects the lender in case the title isn’t clean)
• Title search fees (paid for a background check on the title to make sure there aren’t things such as unpaid mortgages or tax liens on the property)
• Recording fee (paid to a city or county in exchange for recording the new land records)
• Escrow deposit (for a couple months’ property taxes and private mortgage insurance)
• Survey fee (covers the cost of verifying property lines)
• Appraisal fee.
• Charges for any inspection required or requested by the lender or you.
• Pest inspection fee.

Who Pays Closing Costs?
These charges are paid by the home buyer, or the person who is acquiring the mortgage.

Typically closing costs run between 2-5% of the total cost of the loan.
On some loans such as VA loans, the seller pays a portion of these costs. So, if your home cost $170,000, you might pay between $3,400 and $8,500 in closing costs. On average, buyers pay roughly $3,700 in closing costs, according to a recent survey.

How can you, the home buyer, avoid the closing costs?
Many buyers are asked to pay closing costs at the time of sale; however, a large outlay of cash at this point is never convenient.

As a home buyer, there are some ways to avoid upfront closing costs. Some lenders might agree to roll the closing costs into the cost of the loan but in this case you will end up paying interest on the closing costs. Negotiating with the seller to pay the closing costs. The seller might agree to pay some or all of the buyer’s closing costs. Typically the seller pays up to 3% in closing costs.

Either of these options can help the home buyer avoid having to come up with cash when there are already many strains on the wallet.