What exactly are closing costs, and how should you prepare for them when buying or selling a home?

Closing costs are the collection of fees and expenses that come due when a real estate transaction is finalized. They typically range from two to five percent of the purchase price, depending on your loan, property, and negotiated terms.

What Are Closing Costs?

Closing costs include the services and administrative work required to legally transfer property ownership. While the exact numbers vary, they generally fall into a few categories:

1. Lender-Related Fees

If you are financing your purchase, your lender will charge fees such as:

• Loan origination fees

• Appraisal

• Credit report

• Underwriting

These costs cover the work required to approve and fund your loan.

2. Title and Escrow Fees

These fees ensure the property legally transfers from seller to buyer. They often include:

• Title search

• Title insurance

• Escrow services

• Recording fees

Title insurance protects you against potential ownership disputes tied to the property’s history.

3. Prepaid Costs

Some costs are paid upfront at closing but apply to future months. These can include:

• Property taxes

• Homeowners insurance

• Prepaid interest

These are not additional fees, but rather early payments that set up your escrow account.

How Much Should You Expect to Pay?

As a buyer in the Tacoma and South Puget Sound area, you can generally expect closing costs to fall between two and five percent of the purchase price. The final number depends on your loan type, interest rate, and whether you negotiate seller concessions.

As a seller, your closing costs often look different. They may include:

• Real estate commissions

• Excise tax

• Title and escrow fees

• Potential negotiated concessions

Understanding these costs early helps you avoid surprises and plan confidently.

Can Closing Costs Be Negotiated?

Yes, in many cases.

You can negotiate:

• Seller concessions toward buyer closing costs

• Lender credits in exchange for a slightly higher interest rate

• Certain service fees

Every transaction is unique. That is why strategy matters. When you understand the full financial picture from the start, you can structure an offer that supports your goals rather than reacting to numbers at the last minute.

When Do You Find Out the Exact Amount?

Buyers receive a Loan Estimate shortly after applying for a mortgage. This provides an initial breakdown of expected costs.

Closer to signing, you will receive a Closing Disclosure. This document outlines the final numbers and must be provided at least three days before closing. Reviewing it carefully ensures everything aligns with expectations.

Sellers receive a settlement statement detailing their net proceeds. Reviewing this ahead of signing gives you clarity on what you will walk away with.

How to Prepare Financially

The best approach is simple: plan early and stay informed.

Here are a few smart steps:

• Ask for a detailed cost estimate before writing an offer

• Build a buffer into your savings

• Review documents promptly

• Ask questions when something feels unclear

Buying or selling a home is a major financial decision. Confidence comes from understanding the numbers.

If you are thinking about making a move in Tacoma or anywhere in the South Puget Sound, I am always happy to walk through the details with you. Sometimes a quick conversation clears up questions faster than hours of online research. If you would rather sit down over coffee and map out your goals, that works too.

You deserve clarity before you commit.

Closing costs are not something to fear. They are simply part of the process. When you understand them from start to finish, you can move forward with confidence and focus on what really matters: your next chapter.

If you have questions about closing costs or want to talk through your plans, reach out anytime. I would love to help you make a smart and informed decision.