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You probably know this – on the day you close on your new home, you’ll be asked to provide a cashier’s or certified check for your down payment. But did you know that you’ll be asked to do the same to cover closing costs?

Try not to worry. All the information you need on closing costs – what they are and how much they’ll be – will be provided well in advance of closing. There won’t be any surprises.

What Are Closing Costs?

Closing costs are one-time fees charged by your lender and other third parties in order to complete your real estate transaction. Your lender will typically charge fees for things such as document preparation, loan origination and tax services. Third-party fees cover the cost of the property appraisal, termite inspection, title search and other services.

How Much Will They Be?

While typical closing costs hover around 2% of the property’s purchase price, they can sometimes be higher. So on a $100,000 home, you may need to pay $2,000 or more in closing costs.

The Loan Estimate Gives You the Details

Once you qualify for a mortgage loan, your lender will provide you with a written Loan Estimate (LE), which will include all of your closing cost information. Your loan officer will go through this information with you in detail and answer any questions you may have.

Closing Disclosure Statement

A few days in advance of closing, your lender will also provide you with a Closing Disclosure Statement detailing all your closing costs. This document should closely match your LE and you should discuss any differences with your lender.

It’s true, sometimes the seller will help out with closing costs. And, with certain loan programs, you can roll your closing costs into your mortgage loan. In most instances, though, the buyer pays closing costs. So you should be prepared. Be sure to understand your LE and work closely with your loan officer as you approach closing.

What about the other expenses of owing a home?

Click on the graphic below to learn more about the other expenses that come with owning a home.


First-Time Home Buyer's Guide Icon

First-Time Home Buyer’s Guide

If you’re thinking about buying your first home, a great place to start is with our First-Time Home Buyer’s Guide, which provides all sorts of advice, tools and tips for the home buying journey. It will give you a clear picture of what to expect all along the way. View or download the guide today for the information you need to make a sound financial decision.

View the Guide

Daunia Lemke

Daunia is an Assistant Vice President of Mortgage Loans at the Hastings branch of Heartland Bank. She is a lifelong resident of Hastings with 16 years of banking experience. She enjoys serving the neighbors in her community.

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