What Closing Costs to Expect When Purchasing or Refinancing a Home!

Let’s be real — closing day is one of the most exciting (and stressful) moments in the homebuying process. You’ve found the house, locked in your rate, and you’re ready to get those keys. Then… boom — your lender drops the words “closing costs.”

If you’re like most buyers, that’s the moment your eyebrows raise and you start thinking, “Wait, what exactly am I paying for?”

Don’t worry — you’re not alone. Let’s break down what closing costs actually are, what’s included, and what you can expect whether you’re buying or refinancing.

First Things First: What Are Closing Costs?

Closing costs are simply the fees and expenses required to finalize your mortgage. They cover everyone involved in helping you close — the lender, title company, county recorder, appraiser, and more.

Think of it like this: your down payment buys you the house, and closing costs pay the people and processes that make that purchase possible.

How Much Are We Talking About?

On average, closing costs range between 2%–5% of your loan amount.

So, for example:

• If you’re buying a $400,000 home, expect about $8,000–$20,000 in total closing costs.

• If you’re refinancing, it’s often a bit less — usually 2%–3%, depending on your loan type and lender.

And yes — in some cases, sellers can help cover a portion of your costs through seller credits or concessions, so always ask!

What’s Included in Closing Costs?

Let’s walk through what makes up that total number.

1. Lender Fees

These are charged by your mortgage lender for originating and processing your loan.

• Loan origination fee

• Underwriting/processing fees

• Discount points (optional to lower your rate)

💡 Pro Tip: Brokers (like us!) often have lower origination costs than big banks — and more flexibility with pricing.

2. Title & Escrow Fees

This covers the legal side of transferring ownership.

• Title search & insurance (protects you and the lender from future ownership claims)

• Escrow/settlement fees (the company that holds your funds until closing)

3. Appraisal & Inspection Fees

These ensure the home’s value supports your loan amount and that there aren’t any major issues with the property.

• Appraisal fee

• Home inspection (optional but highly recommended!)

4. Prepaid Costs

These aren’t fees exactly — they’re prepayments for things you’ll continue paying after closing:

• Property taxes

• Homeowners insurance

• Prepaid interest (from the day you close to the end of that month)

5. Government & Recording Fees

The local county or city will charge to officially record your ownership and mortgage documents.

• Recording fee

• Transfer tax or stamp tax (varies by state or county)

Refinancing? Here’s What’s Different

When you refinance, most of the same costs apply — but you can often roll them into your new loan balance instead of paying out of pocket.

You might also skip certain fees, like:

• Home inspection (unless required by lender)

• Title updates (often discounted if you use the same title company)

💬 Here’s a tip: Ask for a “break-even” analysis — this shows how long it’ll take to recover your refinance costs through your new lower payment.

How to Save on Closing Costs

• Ask your lender for a Loan Estimate (LE) — it’s your breakdown of every cost, line by line.

• Compare lenders or brokers — not all charge the same fees.

• Negotiate seller credits — if you’re buying, you can sometimes have the seller cover part of your costs.

• Use your tax refund or gift funds — yes, these can often go toward closing!

Bottom Line

Closing costs aren’t there to surprise you — they’re part of the process of buying or refinancing a home. The key is understanding what they cover and planning for them early.

When you work with a knowledgeable broker, we’ll walk you through every number, show you ways to minimize costs, and make sure you close with confidence.

Because the goal isn’t just to buy a home — it’s to make sure you understand every dollar that gets you there.

Ready to see what your closing costs might look like? Let’s connect today and run your personalized estimate!

👉 Visit www.pointersfinance.com or call 512-900-5737 to get started.