What is included in closing costs?
Depending on the transaction, costs can include lender charges, appraisal and other required services, title and settlement services, recording charges, and applicable taxes. Prepaid interest, insurance, and an initial escrow deposit can add to the amount needed.
The amount varies by property, location, loan, timing, and service providers. Use your Loan Estimate to see the charges for your transaction rather than relying on a generic percentage.
Cash to close is a different number.
Cash to close reflects more than loan fees. It includes your down payment and other amounts due, with adjustments for money already paid and applicable credits. Review the calculation and ask what changed if it differs from your earlier estimate.
Credits involve tradeoffs.
Seller credits may help cover eligible costs within program limits. Lender credits typically come in exchange for a higher interest rate. Discount points work in the opposite direction: upfront charges may buy a lower rate. Compare the costs over the time you expect to keep the loan.
Review the final details.
Compare your Closing Disclosure with your Loan Estimate. Check the loan amount, rate, payment, fees, and cash needed. Confirm payment instructions directly with your closing agent using a trusted phone number before sending money.
Your questions.
Straight answers.
Are closing costs included in the down payment?
No. They are separate, even though both can contribute to the total cash required to complete the purchase.
Does a lender credit make the loan free?
No. Ask how the credit affects the interest rate and the total cost over your expected timeframe.
Sources
General educational information. Program availability, eligibility, pricing, and documentation depend on your state, property, and application. Ask an expert for current options; this page is not a loan offer or approval.