Question 1

What are typical closing costs?

Accepted Answer

Closing costs typically range from 2% to 5% of the home purchase price. On a $350,000 home, expect $7,000 to $17,500 in fees including lender charges, title insurance, escrow fees, inspections, and prepaid items like property taxes and insurance.

Question 2

Can the seller pay my closing costs?

Accepted Answer

Yes, in many transactions sellers agree to pay 2%–3% of closing costs (called seller concessions). This is more common in buyer's markets. Your real estate agent can negotiate this as part of the purchase offer.

Question 3

What's the difference between closing costs and the down payment?

Accepted Answer

The down payment is your equity stake in the home (typically 3%–20% of price). Closing costs are separate fees for processing the mortgage, insuring the title, and prepaying taxes/insurance. You need both at closing.

Question 4

Are closing costs tax deductible?

Accepted Answer

Some closing costs are deductible: mortgage points, prepaid property taxes, and prepaid mortgage interest. Others like title insurance, appraisal fees, and recording fees are not deductible but are added to your cost basis.

Question 5

What is PMI and when do I need it?

Accepted Answer

Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It costs $50–$200/month and protects the lender if you default. You can request PMI removal once you reach 20% equity.

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