Closing Costs Explained: What Every Homebuyer Needs to Know

If you’re planning to buy a home this year, there’s one expense you can’t afford to overlook: closing costs.

Almost every buyer knows they exist, but far fewer understand what they actually cover—or how much they can vary depending on where you buy. Let’s break it down.

What Are Closing Costs?

Closing costs are the additional fees and payments due when finalizing your home purchase. Every buyer has them, and they can add up quickly.

According to Freddie Mac, they often include:

• Homeowner’s insurance

• Title insurance

• Loan application fees

• Credit report fees

• Loan origination fees

• Home appraisal

• Home inspection

• Property survey

• Attorney fees

National vs. Local: Why the Numbers Vary

When you search online, you’ll often see that closing costs typically range from 2% to 5% of a home’s purchase price. While that’s a good starting point, it doesn’t tell the whole story.

Closing costs also depend on:

• Local taxes and fees (like transfer taxes and recording fees)

• Service costs for attorneys, title work, and inspections in your area

• State laws and regulations that may require specific services

Of course, the price of the home itself is a major factor, but state laws, tax rates, and even local fees for title and attorney services can all impact your final closing costs. That’s why it’s smart to connect with the right professionals early on—so you know what to budget for and feel confident before you even begin house hunting.

To give you an idea, here’s a state-by-state breakdown of average closing costs for a median-priced home (see map below):

As you’ll notice, in some states, closing costs can be as low as $1,000–$3,000. In others, they can climb to $10,000–$15,000 or more. That’s a huge difference—especially for first-time buyers—and another reason why understanding what’s ahead is so important.

Can You Lower Your Closing Costs?

Yes—and here are a few proven strategies (via NerdWallet):

• Negotiate with the seller → Ask for credits toward your closing costs.

• Shop around for homeowner’s insurance → Compare coverage and pricing.

• Look into assistance programs → Many states, professions, and communities offer grants or credits to help.

Bottom Line

Closing costs are a big part of buying a home, and they can vary more than most people realize. Understanding them upfront—and knowing how to potentially reduce them—can help you feel more confident in your purchase.

Want a personalized estimate? Connect with a local agent or lender today to review closing costs in your area and build a budget that works for you.