“What First-Time Buyers Should Know About Closing Costs”

You’ve found your dream home, the offer is accepted, and you’re getting ready to close — but then you see a list of extra fees and wonder: What are all these charges for?

Those are your closing costs, and every buyer pays them. Understanding what they cover (and how to plan for them) can help you avoid surprises and budget confidently for your new home.

1. What Are Closing Costs?

Closing costs are the final expenses you pay at the end of the home-buying process. They cover the professional services, paperwork, and legal steps required to transfer ownership from seller to buyer.

These typically range from 2% to 5% of the home’s purchase price, depending on your location, loan type, and lender requirements.

2. What’s Included in Closing Costs

Here’s a breakdown of the most common items you’ll see:

• Loan Origination Fees: Charged by your lender for processing the loan.

• Appraisal Fee: Covers the cost of determining the property’s fair market value.

• Credit Report Fee: A small charge for pulling your credit history.

• Title Search & Title Insurance: Ensures the home’s ownership is clear and protects you and your lender from future disputes.

• Escrow Fees: Paid to the neutral party managing the transaction.

• Recording Fees & Transfer Taxes: Paid to local government offices to record the sale.

• Home Inspection Fee: If not paid earlier, this might appear at closing.

• Prepaid Property Taxes & Homeowners Insurance: You may need to pay the first few months upfront.

While the list looks long, your Closing Disclosure will itemize each charge so you can review it carefully before signing.

3. Who Pays Closing Costs?

In most cases, buyers cover the majority of closing costs, but sellers often pay some fees too — especially if negotiated in the purchase agreement.

In competitive markets, sellers rarely agree to cover costs, but in slower markets, buyers can sometimes request seller credits to offset expenses.

4. How to Prepare (and Save) for Closing Costs

• Get an Estimate Early: Ask your lender for a Loan Estimate after pre-approval. This will give you a good idea of expected fees.

• Compare Lenders: Some lenders charge lower origination or application fees.

• Ask for Seller Concessions: Your Realtor can help negotiate a credit at closing.

• Use Gift Funds or Assistance Programs: Many first-time buyer programs offer help with closing costs.

Planning ahead ensures you won’t be caught off guard on closing day.

5. What Happens on Closing Day

When it’s time to close, you’ll review and sign the final paperwork — including the Closing Disclosure that outlines all fees, loan terms, and payments. Once everything is signed and funds are transferred, you’ll get the keys to your new home.

It’s the last step between you and homeownership!

Final Thoughts

For first-time buyers, closing costs can feel like a maze of unfamiliar terms and charges. But with the right guidance and preparation, they become just another step in your exciting journey toward owning a home.

At Docent Realty and Company Group, we walk our clients through every detail of the buying process — including closing costs — to make sure there are no surprises, only smooth transitions and happy homeowners.