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- The average mortgage closing costs needed to buy a home in 2019 in the US were $3,339 without taxes, and $5,749 with taxes, according to data from mortgage technology company ClosingCorp.
- Your closing costs cover the bank's lending costs, like underwriting costs, title search costs, and loan origination fees.
- This cost does not include your down payment, though it's generally due at the same time.
- Closing costs, which vary by state, are generally between 3% and 6% of a loan's value, according to the Federal Reserve board.
- Policygenius can help you compare homeowner's insurance policies to find the right coverage for you, at the right price »
Closing costs are another expense to consider when shopping for a mortgage, or considering buying a house. Your closing costs can add significantly to the amount you need to buy a home, and in an expense that's separate from your down payment.
It is possible to get a loan without closing costs, but often, the costs roll into the life of the loan. You may find that a loan with lower or no closing costs has a higher interest rate, which could make costs higher than simply paying up front. A lender could also add closing costs to the loan's principal, which increases the total amount you'll pay interest on.
Average closing costs by state
ClosingCorp averaged data from more than 1.6 million single family home transactions in 2019, and calculated the average amount buyers paid in closing costs.
Where you live will have a large impact on what you'll owe to close on your house. According to the data, buyers in in Washington DC paid about $25,800 in closing costs with taxes, while the average Indiana buyer spent $1,909 to close with taxes. Here are the average closing costs by state, both with and without taxes owed at closing.
|State||Average closing costs with taxes||Average closing costs without taxes|
Closing costs vary slightly between states. But, property taxes are the biggest factor. Especially in states with high property taxes, the amount you'll pay at closing will largely depend on whether your loan requires you to pay property taxes at closing.
What fees are included in closing costs?
Closing costs are typically paid to the mortgage lender to cover the upfront costs of the mortgage loan. In general, closing costs include eight main fees, according to the ClosingCorp. However, your closing costs could include other costs or fees for certain loan conditions or types.Board and
When available, data on the median — or middle value of a set of numbers — or average cost from the Federal Reserve Board is included. Estimates on the typical costs from Federal Reserve board data is included where average and median are not available.
- Median cost: $365
Lenders charge this fee to cover the costs of processing a loan application and checking your credit.
Loan origination fee
- Median cost: $2,537 with a 10% down payment
This fee covers the lender's costs of underwriting and preparing your mortgage.
- Typical cost: Varies based on the number of days between your closing and when your loan starts, as well as the loan amount and your interest rate.
You'll have to pay interest for the time between when your first payment starts and you close on the mortgage.
Title search and insurance
- Typical cost: $700 to $900
Lenders run a search for the home's title in order to verify that the seller is the owner. Many lenders also require or suggest title insurance, which can protect you if the title search didn't come back accurately, leaving room for error and someone else to claim that they own the home. Title insurance protects both the lender and homeowner from this situation.
- Typical cost: $300 to $700
An appraisal helps to assure the bank that the home is worth at least the amount of the loan.
Settlement or closing fees, recording fees, or lawyer's fees
- Typical cost: $500 to $1,000
These fees are paid to the lawyer who manages the closing for the lender.
- Typical cost: $150 to $400
Surveys make sure that all buildings are where they're supposed to be, and to record any locations of changes or improvements. This may not be required if a recent survey is available.
- Average cost: $2,410, according to ClosingCorp
Though not always required, property taxes can sometimes be due at closing depending on your bank and mortgage. If you do owe property taxes at closing, it's common to pay six months of property tax.
Additional fees paid for specific loan types
- Private mortgage insurance: If you're planning on making a down payment less than 20% of the home's purchase price, you'll owe private mortgage insurance, or PMI. The first payment is typically due at closing, and is generally between $50 to $100.
- Fees for FHA, VA and RHS loans: If you're planning to use a loan through the Federal Housing Administration (FHA), Veterans Administration (VA) or Rural Housing Service (RHS), you may have to to pay a fee at closing.
- FHA: About 1.75% of the loan amount
- VA: Between 1.25% and 3.3% of the loan amount
- RHS: About 2% of the loan amount
- Homeowner's insurance: If your mortgage includes an escrow account, you could be required to pay for the costs of homeowners insurance to your lender at closing.
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