How much are closing costs on a home? What buyers can expect to pay

As you prepare to buy a home, you'll need to save for more than a down payment. Another major, though sometimes overlooked, expense is closing costs, a collection of fees that come with funding a mortgage and finalizing a property sale.

Closing costs typically range from 2% to 5% of your loan amount and are usually paid upfront. Understanding what closing costs are and who pays closing costs can help you budget and avoid last-minute surprises at closing.

Closing costs are fees you have to pay to take out a mortgage and finalize the sale of a home. They include fees related to your home loan, such as origination fees and any discount points, along with costs related to the real estate sale, like appraisal, title search, insurance and attorney fees. You usually pay closing costs on closing day when you sign your final loan documents.

Closing costs are not the same as your down payment.

"A down payment and closing costs are two separate parts of buying a home, [but] many first-time buyers lump them together," says mortgage broker Chris Cartwright. "I often explain it this way: the down payment buys the house, while closing costs buy the loan…

Original source: https://www.usatoday.com/money/