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6 min read ·Close the Deal

Closing Costs Explained

Key Takeaways

✓Closing costs typically run 2-5% of the home price
✓You'll receive a Loan Estimate within 3 days of applying, showing expected costs
✓Some closing costs are negotiable or can be covered by assistance programs

What Are Closing Costs?

Closing costs are fees paid at closing to finalize your home purchase. They include lender fees (origination, underwriting), third-party fees (appraisal, title insurance, attorneys), and prepaid items (property taxes, homeowner's insurance, interest). Expect to pay 2-5% of the purchase price.

Common Closing Cost Items

Major items include: loan origination fee (0.5-1% of loan), appraisal ($400-600), title insurance ($500-1,500), attorney/settlement fees, recording fees, prepaid taxes and insurance (several months), and per-diem interest. Your Loan Estimate itemizes expected costs.

Closing costs breakdown showing typical fees on a $200,000 home — Where your closing costs go

Reducing Closing Costs

Shop around—lender fees vary. Ask the seller to contribute (common in buyer's markets). Use KHC or local assistance that covers closing costs. Compare title insurance quotes. Some fees are fixed, but others are negotiable. Review your Closing Disclosure carefully before closing.

🏠 Kentucky Closing Cost Help

KHC programs can help with closing costs, not just down payment. Some local programs specifically target closing costs. Kentucky doesn't require attorneys for closings (title companies can handle it), which can save money compared to attorney-required states.

✅ Your Next Step

Review your Loan Estimate carefully and ask your lender to explain any fees you don't understand. Compare estimates from multiple lenders.

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