Mortgage Closing Costs Explained

Mortgage closing costs can range from 1 to 3 percent of a mortgage, depending on the circumstances. These costs are paid at the time of closing to cover the expense of paying the mortgage broker, paying the home inspector, filing paperwork with the county and even paying for a credit check. 

Covering Closing Costs

Always anticipate saving at least three percent of your total mortgage for closing costs. Many first-time home buyers do not account for this sum when saving for a down payment, and this can result in an unexpected expense. If you would like to pay less down on your mortgage, consider asking the seller to cover these costs as part of your contract.

Saving on Closing Costs

Aside from seller-paid options, you can reduce the cost incurred to close on your home by asking for an itemized list of costs up front as part of a "good faith" estimate from your lender. If the lender states an employment verification will cost you $30, ask if you can provide a paycheck and letter from your employer directly. Do the same to verify an account balance with your bank. These small savings can add up to reduce closing costs.