What are closing costs?

A common question I get is how much does it cost to purchase a home? Besides having the money for a down payment, what other fees do I have to pay for?

First of all, what are closing costs? Closing costs are fees associated with your home purchase that are paid at the close of escrow. This may include title fees, recording fees, underwriting fees, origination fees, title insurance and more. Some fees that are paid upfront are the appraisal and the home inspection. Closing costs are usually between 2%-3% of the purchase price of your home. For example, if you are purchasing a $600,000 home with a 5% down payment, your closing costs could be around $12,000 - $18,000 plus the $30,000 down payment. Of course, these are just estimates and may differ depending on the type of loan you have and the price of the home you are purchasing. This is just to give you a general idea on how much money you may need to save up and how you can calculate your own closing costs.