white and red wooden house beside grey framed magnifying glass

Understanding Closing Costs

Buying a home involves more than just the down payment. Closing costs are an important part of the home-buying process, and understanding them ahead of time can help you avoid surprises on closing day.

This guide explains what closing costs are, what they typically include, and who may pay them.

Quick Facts

Closing costs are separate from your down payment.

Buyers may be able to negotiate seller contributions toward closing costs.

Some costs are lender-related, while others are required by law or the closing attorney

They typically range from 2% to 5% of the purchase price, depending on the loan, lender,

Your lender will provide a Loan Estimate and Closing Disclosure outlining your expected costs.

In This Guide

This guide is designed for:

✔ First-time homebuyers

✔ Anyone preparing to purchase a home

✔ Buyers comparing loan options

✔ Buyers using FHA, VA, USDA, or Conventional financing

Who This Guide Is For

  • What Are Closing Costs?

  • Common Closing Costs

  • Who Pays Closing Costs?

  • Can Closing Costs Be Reduced?

  • Preparing for Closing Day

Introduction

One of the most common misconceptions among first-time homebuyers is that the down payment is the only money needed to purchase a home.

In reality, buyers should also plan for closing costs—fees and expenses associated with completing the purchase of a home.

Understanding these costs early in the process allows you to budget appropriately and explore programs or seller concessions that may help reduce your out-of-pocket expenses.

1. What Are Closing Costs?

Closing costs are the fees paid to complete your real estate transaction. They cover services provided by your lender, the closing attorney or title company, government agencies, insurance providers, and others involved in the transaction.

Some costs are paid before closing, while most are collected at the closing table.

Man proposes to woman in a kitchen.
Man proposes to woman in a kitchen.

2. Common Closing Costs

While every transaction is different, buyers commonly pay some or all of the following:

Loan Origination Fees

Fees charged by your lender to process your mortgage.

Appraisal Fee

Required by the lender to determine the market value of the home.

Credit Report Fee

Covers the cost of obtaining your credit report during the loan approval process.

Home Inspection

Although usually paid before closing, buyers often include this as part of their overall purchase costs.

Attorney or Closing Fees

In Georgia and South Carolina, real estate closings are typically handled by a real estate attorney.

Title Search

Verifies that the property's ownership history is clear and that there are no outstanding claims against the property.

Title Insurance

Protects buyers and lenders against certain title defects or ownership claims.

Recording Fees

Paid to the local government to officially record the transfer of ownership.

Prepaid Property Taxes

Depending on when you purchase the home, you may prepay a portion of the property taxes.

Homeowners Insurance

Most lenders require the first year's premium to be paid before or at closing.

Escrow Account Funding

Many lenders collect several months of property taxes and homeowners insurance to establish your escrow account.

a person sitting at a desk with a calculator and a notebook
a person sitting at a desk with a calculator and a notebook

3. Who Pays Closing Costs?

Closing costs are often shared between the buyer and seller, although each party pays different expenses.

Buyers generally pay costs associated with obtaining their loan.

Sellers often pay expenses related to transferring ownership, commissions, and any agreed-upon concessions.

Every purchase contract is negotiable, and who pays which costs is determined during the negotiation process.

Couple celebrating good news in the kitchen.
Couple celebrating good news in the kitchen.

4. Can Closing Costs Be Reduced?

Yes.

Several options may help reduce the amount buyers need to bring to closing.

These may include:

  • Seller-paid closing cost concessions

  • Down payment assistance programs

  • Lender credits

  • Builder incentives on new construction

  • Certain employer-sponsored homebuyer programs

The best option depends on your loan program and financial situation.

Woman in suit holding keys and a clipboard
Woman in suit holding keys and a clipboard

5. Preparing for Closing Day

Before closing, review your Loan Estimate and Closing Disclosure carefully with your lender.

Ask questions if you don't understand a fee.

Your real estate agent, lender, and closing attorney are there to help ensure you understand every document before signing.

The Arich Tip

One of the easiest ways to reduce stress on closing day is to review your Closing Disclosure several days before closing. If something doesn't look right, you'll have time to ask questions before you arrive at the closing table.

Common Mistake

Many buyers save enough money for the down payment but forget to budget for closing costs.

Planning for both expenses early in the process helps prevent last-minute surprises.

Smiling women walk together on a path towards a house.
Smiling women walk together on a path towards a house.

Frequently asked questions

Are closing costs included in my down payment?

No. They are separate expenses.

Can the seller pay my closing costs?

Yes. In many transactions, sellers agree to contribute toward a buyer's closing costs as part of the negotiated contract.

When will I know the exact amount?

Your lender will provide a Closing Disclosure at least three business days before closing, outlining your final costs.

Can closing costs be rolled into my loan?

In some situations—such as certain refinance transactions or specific loan programs—some costs may be financed. For most home purchases, however, buyers should expect to pay closing costs at or before closing.

Related Guides

Mortgage Programs in Georgia & South Carolina
Mortgage Pre-Approval Guide
Down Payment & Homebuyer Assistance Programs

Continue Your Home Buying Journey

After reading this guide, you may also find these resources helpful:

First-Time Home Buyer's Guide
Download your guide to Understanding your closing costs

Keep this guide as a reference while preparing for your home purchase so you'll know what to expect before closing day.

Ready to Take the Next Step?

Whether you're just starting to explore homeownership or you're ready to begin your search, having a clear plan makes all the difference.

At The Arich Team, we're here to answer your questions, explain your options, and guide you every step of the way. Our goal is to help you make confident, informed decisions—not to pressure you into buying before you're ready.

If you'd like to discuss your goals or create a personalized home-buying plan, we'd be honored to help.

📞 Ari Saladin: 808-594-7918

📞 Richard de los Santos: 386-333-4795

📧 Ari@Arich.us

📧 Richard@Arich.us

🌐 www.Arich.us

Serving Georgia & South Carolina | English • Español • Português

About the Authors

The Arich Team is a veteran-led real estate team serving buyers, sellers, and investors throughout Georgia and South Carolina.

Our mission is to educate, guide, and empower families to make confident real estate decisions.

Veteran-Led. Family-Focused. Helping Families Build Wealth Through Real Estate.