What are closing costs and how much are they?

These are fees associated with the application or the underwriting process.

• Application fees can be upwards of $500.
• Courier costs for delivering mortgage documents usually run around $30.
• Loan origination or processing fees are additional costs from underwriting and services performed to finalize your loan. These costs may vary and may not be included, depending on your lender.

These are costs related to quality checks on your home’s status.

• Appraisal costs can range from $300 to $500.
• A credit reporting fee can range from $10 to $100.
• Flood certification may be required if your home is in a flood zone and can run between $15 to $25.
• Lead-based paint inspection fees can be approximately $300 and may be required depending on the age or condition of your home.
• Pest inspections can run around $100, and some states may require them.
• Survey fees can range between $400 and $1,000, depending on the size of your home.
• A title search can be upwards of $200, and helps identify any unpaid taxes, liens, or bankruptcies against the home before your purchase.

These are costs that go toward your local or state government.

• Some lenders may ask you to pay a year's worth of upfront property taxes at closing. Talk with your lender before your closing date to understand what is expected.
• Recording fees can vary by county and help cover the cost of updating public land ownership records. These fees can be around $125.
• Tax monitoring and tax status research fees may be included to verify the accuracy of property taxes.
• A transfer tax goes to your local government and covers the cost of updating your home’s title to your name.

These costs cover initial portions of payments that go toward your mortgage or insurance.

• Escrow funds, also called prepaids or reserve funds, are funds channeled into your escrow account.
• FHA mortgage insurance is required if you purchase an FHA loan. You will also have to pay a mortgage insurance premium (MIP) if your down payment is less than 10%. This insurance cost can be 0.15-0.75% of your loan amount.
• Some closing costs may include an upfront payment of your homeowners insurance for the year.
• Lender’s title insurance, which helps protect your lender if you lose your home or a title claim, may be included. This one-time cost is usually 0.5-1% of your mortgage amount.
• Owners title insurance protects you against title claims against your property. It’s a one-time fee that is typically 0.5-1% of your mortgage.
• Prepaid interest may be required, which is a payment for the interest that accrues between closing and your first mortgage payment.

Some additional closing costs may apply. Talk with your lender to determine whether these costs apply to you.

• Attorney fees may be required depending on your state and the logistics around your title transfer and closing coordination. Fees will vary.
• Closing fees may be charged, which are paid to your escrow company or attorney.
• In some cases, you may pay earnest money as part of your purchase. This money shows sellers your intent to buy and typically ranges between 1-3% of the home’s price. Earnest money is typically subtracted from your down payment.
• HOA fees or dues may be required if your home is part of an HOA (homeowners association). Typically, one month’s dues are paid upfront at closing, and the seller will pay the transfer fee.
• Private mortgage insurance, or PMI, is required if your down payment is less than 20% or if you use an FHA or VA loan. PMI is typically part of your monthly payment, but some loans may allow you to roll these costs into a one-time fee at closing.

Closing costs for purchases with an FHA loan are typically 2-6% of the home sale price, which includes an upfront mortgage insurance premium fee and a monthly payment during the life of the loan (until you have 20% equity in your home and may refinance into a conventional loan). There are also limits on closing costs for FHA loans: they cannot exceed 6% of the home’s appraised value or purchase price, whichever is lower.

Conventional loan closing costs are approximately 2-5% of the home sale price, with varying requirements for sellers, depending on the buyer’s down payment. For example, if a down payment is at least 25% of the purchase price, the seller may pay up to 9% of closing costs. As the down payment percentage decreases, the seller’s closing cost percentage may decrease as well.

You can find out more information about Wells Fargo’s fixed-rate mortgages and adjustable-rate mortgages.

Closing costs for VA loans are typically 1-5% of the total loan amount. If you’ve used VA loan benefits before, the cost of funding fees ranges from 0.5-3.6% of the total loan costs. Buyers can’t have the seller pay more than 4% of the total loan amount in closing costs for VA loans.