Closing Costs: What are they and how much are they?

 

Mortgage closing costs include expenses related to applying for the loan and finalizing a real estate sale. Some of the costs are related to the property, while others are related to the mortgage lender’s services and the paperwork involved in the transaction. You’ll typically pay most of these costs on closing day — though, if you have certain types of government-backed loans, you may be able to roll the closing costs into your mortgage.

How much are closing costs?

Mortgage closing costs are typically about 2 to 5 percent of your total loan amount. For a $400,000 loan, for example, closing costs could range from $8,000 to as much as $20,000.

The total amount you’ll pay in closing costs depends on three key factors:

1.) The price of the home

2.) The home’s location

3.) Whether you’re buying or refinancing

According to a 2025 report from Lodestar, a closing cost data provider, the average closing costs for a borrower buying a single-family home in the U.S. are $4,661. The average closing costs for a refinance are $2,403. Keep in mind that these averages don’t typically include real estate commissions.

However, those costs vary widely across the country, partly due to state and local tax laws. For example, in the survey, homebuyers in Washington, D.C. paid the highest average closing costs for a purchase loan, at $17,545. New York and Delaware came in second and third, respectively, with average closing costs of more than $13,000 and more than $12,000. The states with the lowest average closing costs were Missouri ($1,740), Iowa ($1,640) and South Dakota ($1,551).

Who pays closing costs?

While the buyer tends to pay many closing costs, the seller is responsible for paying some, too. Buyers can try to negotiate with the seller to cover some of their costs — called “seller concessions” — though that’s typically only feasible if the seller doesn’t have competing offers.

In addition, there are limits on seller concessions, depending on the buyer’s loan type. If you are purchasing a property with a conventional loan, you may negotiate up to 9 percent of the purchase price or appraised value, whichever is lower. FHA loans and USDA loans allow for up to 6 percent, while VA loans have a maximum of 4 percent total. Jumbo loans vary based on the lender.

Closing costs paid by the buyer

Here are closing costs you can typically expect to pay if you’re buying a home:

• Appraisal fee: This fee covers the cost for a licensed appraiser to determine the home’s value. The average appraisal fee for a single-family home is about $350, according to Angi. While this is considered a closing cost, you typically pay it well before closing day.
• Attorney fee: You may choose to use an attorney during your closing, or your state may require one.
• Credit check fee: Chances are, if you’re in the process of purchasing a home, you’ve checked your credit score and report already. But your lender will want to make its own inquiry, and there’s typically a fee associated with doing so.
• Discount points: By purchasing discount points (also called mortgage points), you can lower your mortgage rate. You’ll usually pay 1 percent of the loan principal for a 0.25 percent rate reduction.
• Origination fee: Lenders can charge an origination fee for creating the loan, which is generally 0.5 percent to 1 percent of the amount you’re borrowing. This fee might include other costs, such as the application fee and the underwriting fee.
• Per-diem interest: The per-diem interest rate on a mortgage is the daily interest that’s charged between the closing date and the start of the billing cycle.
• Prepaid homeowners insurance premiums, mortgage insurance premiums, property taxes and homeowners association (HOA) fees: Your lender may require a year of advance insurance and property tax premiums to be held in escrow. If your property is located in a community with a homeowners association, you may have to prepay some of those fees at closing, too.
• Property survey fee: Your lender may require this to confirm that your property boundaries match the title. The cost depends on the property size, the survey type and your location.
• Real estate agent commissions: The buyer’s agent and the seller’s agent typically split a commission of about 5 percent of the sale price.
• Recording fee: This fee goes to a government agency that records the real estate transaction and makes it a public record. It’s often around $125.
• Title insurance policy: Lenders require borrowers to obtain title insurance in case problems arise with ownership after the sale. This policy protects the lender, and the cost is usually about 0.50 percent of the amount of the mortgage. You may also buy your own title insurance for an additional cost.
• Title search fee: Unless you’re buying a new construction home, your lender will have a title company search property records to ensure there aren’t any issues with the title of the home, such as a tax lien. The fee for a title search is around $200.
• Transfer tax: Many states impose a transfer tax when real estate changes hands. Often, the seller pays this tax, but in some places, the cost is shared with the buyer.

How to Lower your Closing Costs

You can’t get away with not paying any closing costs, but there are ways you can lower the amount. Here are a few ways to reduce closing costs:

• Look for lenders that offer discounts: Consider working with a mortgage lender that doesn’t charge an origination fee or that’ll offer you a discount. If you’re getting your mortgage at your bank, you can also try asking for a discount or fee waiver, since you’re already a customer.
• Apply for down payment assistance: Particularly if you’re a first-time homebuyer, explore down payment assistance and grants that can help cover closing costs.
• Use a no-closing-cost loan: Don’t let the name fool you — you’ll still pay closing costs with a no-closing-cost loan. Instead of paying them upfront, you’ll finance them with your mortgage — and pay interest on them — or pay a slightly higher interest rate.
• Negotiate seller concessions. To encourage a sale, a seller might agree to pay some of your costs.
• Shop around when possible: You’re allowed to shop for certain closing costs, like title insurance, title searches and home appraisals. Getting comparison pricing can help you reduce your closing costs.

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Red Flags When Buying a House

 

With so many considerations to weigh in potential properties, here are some red flags to look out for when buying a house, especially during the viewing.

• Poor tiling or flooring work. This would be a sign of a bad flip or remodeling job, and you could end up spending a lot of money to fix it.
• Foundation issues. Hairline cracks are usually a sign the house is settling as it ages, but larger gaps or cracking could signal a bigger issue with the foundation.
• Poor maintenance. If it is apparent from the walk-through that the seller has failed to keep the property in good condition, there might be even worse problems beneath the surface. A poorly maintained home might require costly repairs or renovations.
• Nearby water. If the home is near a pond, lake, canal, ocean or other body of water, the property could be at a higher risk of flooding. Ask your real estate agent to find out if the property is in a FEMA flood zone, which might trigger the need to buy special flood insurance in addition to homeowners insurance.
• Poorly installed windows. This could be a sign of foundation problems or a bad remodeling job requiring new windows. If you need help, check with your real estate agent.
• Mold. Check the bathroom and sink cabinets, as well as take a look around water pipes or drains. Look for small black or gray spots. You can also check the caulking around faucets as well as look for patches on the ceiling.
• Water damage. A musty odor may be a sign of water damage. Be sure to check walls and ceilings for water lines, and look out for exposed piping in basements or laundry rooms to check for rust, water stains or leaks.
• Improper ventilation. Poor ventilation increases the risk of mold. Look for condensation on windows or slightly bubbled or peeling paint around windows, doors or vents. This might mean there’s moisture in the walls or in the ceiling drywall. Source

DRE ID # 01769353  NMLS ID # 394275

Embrace the Season: Benefits of Selling Your Home in Fall and Winter

 

As the seasons change and a crisp breeze fills the air, the idea of selling your home might seem counterintuitive during the fall and winter months. However, this could be a strategic move that aligns perfectly with your goals. Let's explore the unique benefits of listing your home in the colder seasons, addressing your motivations and potentially making this a lucrative decision...

• Less Competition, More Attention

With many sellers waiting for the traditional spring market, the fall and winter present an opportunity to stand out in a less crowded field. Buyers who are actively searching during these months are often motivated, and your home can catch their undivided attention, potentially leading to quicker sales.

• Serious Buyers on the Hunt

Buyers prowling the market during fall and winter are typically more committed. They often have urgent needs, like job relocation or changes in family circumstances. This translates into higher chances of closing deals faster with genuinely interested parties.

• Showcase Cozy Appeal

The fall and winter allow you to play up your home's cozy and inviting attributes. A crackling fireplace, warm lighting, and seasonal decorations create an ambiance that resonates with potential buyers on an emotional level, helping them envision life in your home.

• Highlight Energy Efficiency

Cooler weather gives you the chance to showcase your home's energy-efficient features. From effective insulation to a well-functioning heating system, these elements appeal to buyers looking to cut down on utility costs.

• Advantageous Negotiations

With fewer homes on the market, you may have more negotiating power. Buyers are more likely to compromise on terms, allowing you to secure a deal that aligns with your goals.

• Staging Potential

Fall and winter décor can enhance your home's appeal, making it feel warm and welcoming. Leveraging these seasonal elements in your staging can create a strong emotional connection for buyers.

• Capitalize on Year-End Transactions

Some buyers aim to close before the year ends for tax purposes, which aligns well with your motivation to sell efficiently. Capitalize on this urgency to potentially close deals faster and keep more money in your pocket versus giving it to Uncle Sam.

Conclusion

Selling your home during the fall and winter months isn't just a possibility; it's a strategic decision that aligns with your motivations. The benefits of less competition, serious buyers, cozy staging, and advantageous negotiations make this a favorable time for both you and potential buyers.

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NMLS ID 394275 | DRE ID 01769353

Reducing Buyer’s Remorse Among Home Buyers

 

Agents face a tough reality right now. Your clients have to pay much more for a house. Low inventory can make finding a home in their budget difficult. And even when they manage to win a house, many Buyers have regrets about it. Let’s look at the regrets they have, how you could reduce buyer’s remorse in this market, and why it matters to you.

What Do Buyers Regret About Home Buying?

To determine what first-time home buyers have regretted about their purchase, it helps to look at what first-time home sellers said about their experience in their home. According to a 2025 survey by Opendoor, a huge percentage of first-time home sellers had regrets about buying their home, especially younger sellers.

Just look at the breakdowns of home sellers who thought they made a mistake buying during the pandemic:

• 94% of Gen Z
• 86% of millennials
• 48% of baby boomers

Further, for 37% of millennials, which are one of the biggest groups of home buyers (behind baby boomers), the biggest source of regret was that they underestimated maintenance costs.

How Can Agents Reduce Buyer’s Remorse?

Here are a few ways you can work to reduce buyer’s remorse among your clients...

1. Educate them on a Home Service Plan

In 2025, a Home Service Plan (aka Home Warranty) is a recommended incentive to help sell a house, according to HomeLight. Even with a softening seller’s market, the costs of homes along with high interest rates can make buyers skeptical about the homes they buy.

A big regret younger Buyers have about home buying is maintenance costs were too high. Many younger Buyers don’t have the experience, time, or money to fix things when they break. They also may not know the right person to call about it (and will probably call you first).

If you can show them that a Home Service Plan can help protect their budget against breakdowns to covered parts of things like their A/C, furnace, water heater, and refrigerator, you can directly address the pain they have over the post-closing costs of homeownership. Many Buyers are totally unaware of what a Home Service Plan does. In fact, many of your Buyers will learn what it does from you, which could be a value-added service you provide.

2. Set expectations early and on their terms

You’re always working hard to set expectations for your clients. The key is to set those expectations on their terms. Younger Buyers communicate differently than past generations, and it’s essential that you know how to communicate with them on their terms.

Perhaps the most important aspect of setting expectations is be realistic. You don’t need to doom-and-gloom your younger clients. But since many of them have regrets about home buying (more so than past generations), it’s important to set the tone early: This might be harder than we thought, but I’m going to do everything I can to find a home you love.

Why Do Breakdowns Matter to Agents?

Younger Buyers comprise one of the largest groups of Buyers currently on the market. Coincidentally, many are entering the market at a challenging time. Knowing what it is that they currently regret or fear can help you prepare and adjust for the future.

Additionally, many agents rely on referrals for their success. Happy, fulfilled clients tend to lead to more and better referrals. On the other hand, clients who have regrets may project those regrets onto you, whether it’s fair or not.

Finally, understanding the different kinds of regrets your Buyers have in home buying can help you strategize for the future. Low inventory, high interest rates, and affordability challenges are macro problems that no single agent, company, or entity can solve alone. However, you CAN work to reduce buyer’s remorse among your younger clients, especially in terms of their biggest regret: maintenance costs. Source

NMLS ID 394275 | DRE ID 01769353

Big Bank vs. Mortgage Broker: What's the Difference?

 

Yes - we can compete with Big Banks and win on terms, pricing and service in most situations!! I get this question often…so throwing out to you differences!

Are you planning to buy a home and wondering where to get your financing? Here's a quick comparison to help you make an informed decision!

**Big Bank**

• Convenience: If you already have accounts with a big bank, it might seem convenient to get a mortgage with them.
• Reputation: Big banks have established brands and reputations.
• Limited Options: Big banks typically offer their own mortgage products, which might limit your choices.
• Stricter Criteria: Banks often have stricter lending criteria, which can make it harder to qualify for a loan.

**Mortgage Broker**

• Wide Range of Options: Mortgage brokers have access to a variety of lenders and mortgage products, giving you more options to find the best rate and terms.
• Personalized Service: Brokers work for you, not the lender, so their goal is to find the best mortgage for your unique situation.
• Flexible Criteria: Brokers often have relationships with a variety of lenders, some of whom may be more flexible with their lending criteria.
• Negotiation Power: Brokers can negotiate on your behalf to get better rates and terms than you might get on your own.

**Your Dream Home is Within Reach!** As a dedicated mortgage broker, I'm here to help you navigate the complexities of home financing and find the best mortgage for your needs. Let's work together to make your homeownership dreams come true!

 Contact me today to learn more and get started!

Nmls Lic 394275 Dre Lic 01769353

What Is an Open House?

 

If you've ever listed your home for sale or driven by a newly listed home, you've likely heard about (or seen signs about) an open house. An open house is an invitation to the public to view a home to generate interest and offers in a newly listed property, and a well-attended open house can lead to a speedy sale.

Whether you're on the market to buy or sell, here's what you can expect during an open house. What Is an Open House? Open houses are held to generate interest, attract potential buyers, and help the agent selling the home, says Hao Li, broker with HouseSigma, an AI-powered online brokerage.

"When a seller lists a property for sale, the seller's agent will often hold an open house where anyone who's interested can come inside and tour the home at their own leisure," Li says. "Open houses usually last for about two hours and are normally held over the weekend." An open house lets prospective buyers and their agents have a look at the property during a designated time, which makes coordinating visits easier on the seller and can attract more people all at once.

"The expectation is that buyers who are in the market for the type of property being offered would be able to view at their convenience," says Julie Longtin, broker-owner of Cityside Properties in Providence, Rhode Island. "You do not have to go through the formality of scheduling a private appointment."

While the goal is to sell the property at hand, agents are also looking to connect with prospective buyers who attend and might be selling their own homes down the road, Li says. Open houses are usually held soon after a home is listed for sale. "Seller's agents will typically hold open houses the first weekend of a new listing to capitalize on interest in a fresh, just-hit-the-market property," Li says.

Wait much longer to throw an open house, and chances are most potential buyers have already come across your property and either viewed it or ruled it out. Still, an open house can also revitalize interest in a property that's languishing on the market, especially in a highly competitive market.

"Agents are typically holding more open houses than usual for the same listing because listings are sitting on the market longer," Li says. "Buyers are taking their time during this real estate cool down. In general, there are fewer buyers and fewer bidding wars, so homes just aren't selling as fast."

In 2021, an open house could end in multiple offers—not so today. "Buyers are taking their time," Li says. "They no longer feel the need to rush to put in an offer. So sellers will have to be patient and actually wait for days for offers to come in, if any."

Even if an open house doesn't generate an offer, Longtin says it usually offers a real estate agent a ton of information they can use to adjust the listing price or make fixes to the home, especially if they're asking buyers the right questions. "How well is the property received? Is the property priced right? How does it show to the average person? What are the pros and cons of the subject, and how does that affect the market value? A successful agent would have the tools and the dialogue to gently extract this feedback," she says.

How to Prepare for an Open House as the Seller

Sellers preparing to hold an open house should prepare the way they do for any showing by cleaning, removing personal effects, and leaving the house on the day of the event.

"The best way to hold an open house is to hire an agent who offers staging," Li says. "Clean the property, make sure there's plenty of light and a comfortable ambiance, and tuck personal items out of sight. Especially family photos. Buyers like to picture themselves in the home, so pictures of the current owners hanging on the walls don't help that image."

Longtin stresses that cleanliness is most important on the day of an open house or any showing. "A clean and immaculate property both inside and out is always received better than the alternative," she says. "Make it smell as good as it looks! The more comfortable you make the environment, the longer people stay, the more success you will achieve."

On the day of the event, make yourself (and any family members, children, and pets) scarce and let your agent handle the rest.

"Sellers should stay away during the open house. Resist the urge to peek at what's happening, and whatever you do, do not set up hidden cameras," Li says. "You don't want potential buyers finding a hidden camera and submitting a complaint."

Don't worry if you feel your home gets lots of traffic from folks just browsing for fun. "We all know that the 'Nosy Neighbor' may attend out of curiosity. Not to fret," Longtin says. "Neighbors may have friends or family members who may be a candidate, as well. So, when it comes to open houses, the wider the net, the more fish you can catch!"

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Mortgage Preapproval vs. Prequalification: What's the Difference?

What Is a Mortgage Prequalification?

A mortgage prequalification is a quick estimate of how much home you can probably afford. (At least according to the lender—your actual home budget should be a separate conversation.)

Why is it a quick estimate? Because, honestly, you don’t need to do much to get one. All you need is your name, phone number, and some numbers (real or fake) that show your income, assets and debts. Give these to your lender over the phone, online or in person—and they’ll give you a prequalification on the spot.

When is the best time to get a mortgage prequalification?

First, decide if you’re ready to buy a home. If you are, get prequalified.

Yeah, it’s really that simple. Since a prequalification gives you a big picture idea of how much mortgage you would be approved for, the best time to get one is in the very beginning—when you’re reviewing your budget. Think of it as the first step in the mortgage process.

What do you need to get a mortgage prequalification?

Here’s the truth—you need a lender and that’s about it. As long as you have numbers in your head or on paper, you can get prequalified.

What Is a Mortgage Preapproval?

A mortgage preapproval is a step above a prequalification. It’s a thorough investigation of your income, assets, credit history, rental history and debts. It will give you a concrete idea of how much home you can afford—according to your lender. When you get preapproved, a lender verifies you’re employed, checks that you aren’t falsifying the facts, and makes sure you aren’t swimming in debt up to your eyeballs.

When is the best time to get a mortgage preapproval?

The same as with mortgage prequalification, the best time to get a mortgage preapproval is when you’re ready to start shopping for a house. In fact, we’re going to let you in on a little secret—you can skip prequalification and go straight for preapproval.

When you receive your preapproval, keep one important fact in mind: Your lender will likely approve you for way more money than you should consider spending on a home. Stick with these two guidelines and you’ll have a home you can truly afford, while you work toward bigger financial goals like saving for retirement or paying for your kids’ college:

You need to put at least 5–10% down (20% will help you avoid paying private mortgage insurace). So if you have $20,000 saved, you can afford the down payment on a $200,000 home.

Your payments on a 15-year mortgage should be no more than 25% of your take-home pay. You’ll pay thousands less in interest with a 15-year mortgage than you would with a 30-year mortgage—and you’ll be out of debt in half the time!

You’ll be tempted to look at more expensive homes, especially when you see how much your lender thinks you can afford. But a huge mortgage payment will ultimately make your home a curse, not the blessing it should be. Source