Short Answer
Closing costs are fees paid at closing for services like the loan origination, appraisal, title search, attorney review, and property transfer taxes. For first-time buyers, closing costs typically range from 2% to 5% of the purchase price. On a $350,000 home, that means $7,000 to $17,500 in additional cash needed at closing. You can negotiate for the seller to cover some of these costs or look into down payment assistance programs.
Closing costs catch many first-time buyers by surprise because they focus so much on the down payment. Your Loan Estimate from the lender will itemize all closing costs, including the loan origination fee (typically 1% of the loan amount), appraisal fee ($400 to $700), credit report fee, title insurance, attorney fees, recording fees, and prepaid items like property taxes and homeowners insurance. In New Jersey, closing costs are on the higher side due to transfer taxes and attorney requirements. You can reduce your out-of-pocket closing costs by negotiating a seller credit. In a buyer's market or if the seller is motivated, you can ask them to cover a portion or all of your closing costs in exchange for a slightly higher purchase price. Some first-time buyer programs and local down payment assistance programs can also help with closing costs. Always ask your lender for a detailed estimate early so there are no surprises.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I always tell my first-time buyers to budget for closing costs from day one. They are a real expense, and I do not want you to be caught off guard. I will review the estimated closing costs with you before you make an offer and help you understand what you can negotiate with the seller. If closing costs are a concern, let us talk about strategies to reduce them or find assistance programs. You should never feel surprised at the closing table.
Related Questions
Ready to Take the Next Step?
Every situation is unique. Let us talk about your specific goals and create a plan that works for you.