A young homebuyer looks at the kitchen with a home inspector and reviews repair costs that she will need to add into her total closing costs for the home.

“Closing costs” is an all encapsulating term that many homebuyers will hear often once their offer has been accepted. Closing costs consist of all the additional costs that homebuyers have to pay as they prepare to close on their home. The typical estimate mortgage lenders provide for closing costs is between 3% and 5% of the home’s value – therefore, the higher the purchase price, the more closing costs buyers will have to pay. These costs can vary by state and property type – California closing costs can be very different than Texas closing costs.


Once the purchase contract is signed by both buyer and seller, buyers will need to make an Earnest Money Deposit. Generally, homebuyers deposit 1% to 2% of the sales price.

While Earnest Money Deposits are not formally included in “closing costs,” this deposit is required immediately upon the seller’s acceptance and signing of the purchase contract. The funds for the deposit must be verifiable or from the homebuyer’s bank account.

On the day of closing, the buyer receives credit for the earnest money deposit. The amount will be subtracted from the total cash to close but not physically refunded to the buyer.


A thorough real estate agent will encourage many types of home inspections so that the homebuyer is fully aware of the quality of construction of the home. Not all flaws are apparent from the initial home tour and additional inspections may needed based off of the property disclosures provided.

In most cases, the homebuyer’s inspection fees are paid before the work is finished and are non-refundable even if the homebuyer opts not to continue with the purchase. These costs that homebuyers incur in addition to their closing costs as they prepare to close on their home.

If the home inspection reveals material defects with the home, the homebuyer can negotiate the cost of necessary repairs with the seller. There is a strict timeframe outlined in the contract for when inspections must be completed and disclosed to the seller along with additional credit requests.


These fees will be paid at closing and are calculated into the buyer’s cash to close. Immediately after the signing of the contract, the buyer will send it to their lender and request a closing statement.


Title insurance companies are used to trace the history of mortgages and to ensure that the buyer receives a clear title commitment of their new home. It is the seller’s responsibility to pay off existing mortgages before transferring ownership to the buyer. Title insurance fees can include other miscellaneous costs like the recording of the deed.

This list certainly does not include every possible fee, but it can be useful to know average closing costs and the different fees that are included in them. For homebuyers with questions about closing costs, contact JVM Lending to speak with a mortgage expert by phone at (855)855-4491 or by email at [email protected].

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