09/24/2026
🏡 THE HOME BUYING GUIDE PROCESS | DAY 08 — CLOSING COSTS LET’S MAKE REAL ESTATE MAKE SENSE
You found the house. You got the loan. You made it through inspection and appraisal. Then someone says: “Okay, now let’s talk about closing costs…” And you're like: EXCUSE ME. I THOUGHT I ALREADY PAID FOR THE HOUSE. 😂
Let's break it down:
WHAT ARE CLOSING COSTS?
Closing costs are the costs associated with getting your mortgage and completing the real estate transaction. They are separate from your down payment and can vary depending on your loan, purchase price, location, property, lender, title/closing services, and the terms of your contract.
They can include things like:
🏦 LENDER COSTS
Origination charges, underwriting-related fees, discount points and other charges associated with your mortgage.
📋 TITLE & CLOSING COSTS
Costs associated with the title and closing process, title services and title insurance, depending on the transaction.
🏛️ GOVERNMENT & RECORDING FEES
Things like recording fees, transfer taxes and other government charges, depending on the location and transaction.
🏠 PREPAID EXPENSES
Things that may need to be paid upfront, such as prepaid interest and homeowners insurance.
💰 INITIAL ESCROW
If your loan has an escrow account, you may need to put money into that account upfront for future property taxes and insurance.
And here's an important distinction: Your down payment and your closing costs are two different things‼️
For example, if you're buying a $250,000 house and putting $12,500 down, that $12,500 is your down payment. You may also have closing costs and other amounts due as part of the transaction.
The amount you need to bring to closing can also be affected by seller credits and money you've already paid toward the transaction, such as an earnest money deposit. And remember, some expenses like your inspection or appraisal may be paid before closing rather than at the closing table. So not every expense you've had during the buying process will necessarily appear as a closing cost on your final paperwork.
BUT WHO PAYS THE CLOSING COSTS?
This is where it gets interesting. The buyer generally has costs associated with the transaction, but the contract can determine that the seller pays certain costs. Seller credits can also sometimes be negotiated to help cover eligible closing costs, subject to the terms of the transaction and applicable loan rules.
So when you hear: “The seller is giving the buyer $5,000 toward closing costs.” That does NOT mean the buyer gets a $5,000 check to spend on whatever they want. It's a credit toward eligible costs associated with the transaction, and your lender and closing professional will determine how that credit can be applied based on the loan and transaction.
💡 REALTOR TIP:
When you're getting pre-approved, don't ask your lender only: “How much house can I afford?”
Also ask: “How much money should I expect to need to actually get to closing?”
Your Loan Estimate provides estimated loan terms and closing costs early in the process, while your Closing Disclosure provides the final details of your loan and closing costs. For most mortgage transactions, the Closing Disclosure must be received at least three business days before closing, so you have time to review the final numbers and ask your lender questions about anything you don't understand.
And PLEASE read that Closing Disclosure.
If something looks different from what you expected, ask questions before signing. The goal isn't to memorize every fee.
The goal is to know what you're being charged for, what you're responsible for, what credits you're receiving, what you've already paid, and how much money you'll actually need to bring to closing. Because nobody wants to get three days from getting their keys and suddenly say:
“WAIT… how much money do I need to bring with me?! 😂
Save this one. You're going to want it when we get to the numbers.
Tomorrow: CASH TO CLOSE. 🔑
