Closing costs encompass a variety of fees you pay when closing on a home. We are often asked whether closing costs are negotiable. Some of these fees are negotiable and some are not. Others are optional. The average closing costs range from 2% to 5% of the total loan amount, making up a substantial portion of your overall mortgage expense. We provide a breakdown of each closing cost and how to get the lowest fees for each.
What are Closing Costs?
Closing costs are the expenses, over and above the property’s price, that buyers and sellers usually incur to complete a real estate transaction. Closing costs must be disclosed by law to buyers and sellers and agreed upon before a real estate deal can be completed.
Understanding the Closing Costs
It is important to carefully keep track of the various costs you may need to pay throughout the home buying process. These costs can include, but are not limited to:
- Application fees
- Appraisal fees
- Attorney fees
- Courier fees
- Credit Report fees
- Escrow fees
- Home Inspection fees
- Origination fees
- Recording fees
- Title Insurance Premium
- Title Search fees
- Prepaid interest
Which Closing Costs are Negotiable?
Not every closing fee is negotiable. For example, any government fee, such as title transfer fees or recording fees, will be set in stone. The fees that can sometimes be negotiated include:
- Homeowners insurance
- Discount points (lender credits)
- Origination/underwriting fees
- Application fees
- Rate lock fees Tax service fees
- Real estate commissions
Fees that typically cannot be negotiated include:
- Title insurance
- While some title costs are optional, title insurance rates are filed with the NJ Commissioner of Banking and Insurance and are not negotiable.
- Stamp and tax service fees
- Recording fees
- Transfer taxes
- Property taxes
- Appraisal fees
- Tax service fees
- Flood certification fees
How to Make Your Home Closing Process a Smooth One
While the closing process may seem daunting, there are a few steps you can take to ensure a successful closing.
- Work with only trusted real estate professionals who will help guide you through the process and be available to answer all of your questions.
- Take steps to protect yourself from cyber crime such as wire fraud. Discuss these precautions with your real estate professional.
- Arrive at the closing prepared with all necessary fees and documents. Take your time and don’t be afraid to ask questions if you aren’t clear on what you are signing.
Once the closing process is complete, you’ll be given the keys to your new home.
