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What fees or charges are paid when closing on a mortgage and who pays them?

When you are buying a home you generally pay all of the costs associated with that transaction. However, depending on the contract or state law, the seller may end up paying for some of these costs.

Even if you don’t pay the mortgage closing fees directly out of pocket, you might end up paying them indirectly. Sometimes, you can negotiate with the seller for a “credit” towards your closing costs, but the seller will usually require you to pay a higher price for the home in order to cover the costs of this credit.

You’re still paying for these costs—they are just paid through your loan instead of paid out of pocket. The lender may also offer to give you a credit to help with your closing costs. This credit isn’t free either. Typically, the lender will either increase your loan amount to cover these costs, or charge you a higher interest rate in exchange for the credit.

Common closing fees or charges may include:

  • Appraisal fees
  • Tax service provider fees
  • Title insurance
  • Government taxes
  • Prepaid expenses such as property taxes, homeowners insurance, and interest until your first payment is due

Tip: You can get a detailed explanation of all the fees, charges or other costs associated with your loan by checking our “Your Home Loan Toolkit.”