Closing Costs & What to Expect
Closing costs are the fees and prepaid items due when your purchase finalizes — and they catch first-timers off guard because they're separate from the down payment. For buyers they typically run 2%–5% of the price. On a $650,000 Seattle-area home, that's roughly $13,000–$32,000. Here's exactly where it goes, and how to shrink your out-of-pocket.
Lender & loan fees
Charged by your lender to originate and process the loan. These are the most negotiable — and the ones you compare on the Loan Estimate.
- Origination / underwriting / processing fees
- Discount points (optional, to buy down your rate)
- Appraisal fee (~$700–$1,200 in this market) and credit report fee
Third-party & title fees
Paid to the companies that make the transaction safe and legal. Title and escrow fees are fairly standardized but still worth reviewing.
- Title insurance — a lender's policy is required; an owner's policy is strongly recommended to protect you.
- Escrow / settlement company fee (often split with the seller per local custom).
- Recording fees paid to the county.
Prepaid & escrow items (this is the big, surprising chunk)
Money collected in advance for ongoing costs. These aren't really 'fees' — they're your own future expenses paid early — but they hit your cash-to-close all the same.
- Prepaid mortgage interest from your closing date to month-end.
- Homeowners insurance — usually the first full year, paid upfront.
- Property-tax and insurance reserves to set up your escrow account (often several months' worth).
Washington note: who pays what
Good news for buyers: in Washington the Real Estate Excise Tax (REET) on the sale is customarily paid by the seller, not you. You'll still budget for the lender, title, escrow, and prepaid items above. Your Loan Estimate (within 3 days of applying) and Closing Disclosure (3 days before closing) itemize every dollar — compare them; the bottom-line cash-to-close shouldn't jump without explanation.
How to pay less out of pocket
You have more levers here than most buyers realize. The two biggest:
- Seller concessions: ask the seller to credit a percentage of the price toward your closing costs — common in balanced or slower markets.
- Lender credits: accept a slightly higher rate in exchange for the lender covering costs — smart if you'll refinance or move within a few years.
- Shop title/escrow — you're often allowed to choose providers from the lender's list.
- Close near month-end to minimize prepaid daily interest.
This information is for education only — it is not financial, legal, or tax advice. Loan rates, program rules, and limits change; always verify current details with a licensed lender, your agent, and official sources before making decisions.
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