Skip to main content
Quick Mortgage Loans - home loans and VA lending in Phoenix, Arizona
The Loan Process

Closing Costs, Line by Line

What you're actually paying for at the closing table, what's negotiable, and how the seller can help.

10 min
Read time
2026-06-08
Last updated
The Loan Process
Topic
On this page01The Short Version02Bucket 1 - Lender Fees (Most Negotiable)03Bucket 2 - Third-Party Services04Bucket 3 - Prepaids and Escrow Setup05What the Seller Can Pay for You06What's Actually Negotiable
01

The Short Version

Closing costs typically run 2%–5% of the loan amount and break into three buckets: lender fees, third-party services, and prepaid escrows. Lender fees are the most negotiable. Prepaids aren't really costs - they're funds you'd be paying anyway (taxes, insurance) just prepaid to seed the escrow account.

Every fee is disclosed twice: on the Loan Estimate you get within 3 business days of application, and on the Closing Disclosure you must receive at least 3 business days before signing. Read them side by side.

What you'll learn in this guide
  1. 02Bucket 1 - Lender Fees (Most Negotiable)
  2. 03Bucket 2 - Third-Party Services
  3. 04Bucket 3 - Prepaids and Escrow Setup
  4. 05What the Seller Can Pay for You
  5. 06What's Actually Negotiable
Level

Plain-English

No jargon, real examples

Written by

Licensed advisors

Quick Mortgage Loans

Good for

The Loan Process

Buyers & homeowners

02

Bucket 1 - Lender Fees (Most Negotiable)

These are what the lender charges to originate and underwrite your loan. Different lenders package them differently - one lender's flat 'origination charge' is another lender's 'application' + 'processing' + 'underwriting' fees. Compare the total, not the line items.

Key points
  • Origination charge (or points): 0%–1% of the loan; can be zero on 'par' pricing.
  • Underwriting fee: typically $500–$1,200.
  • Processing fee: $300–$700 if charged separately.
  • Discount points: optional, each point (1% of loan) buys down the rate - do the break-even math.
03

Bucket 2 - Third-Party Services

These aren't lender fees, but the lender collects them at closing. Some you can shop for (title, survey), some you can't (appraisal, credit report). The Loan Estimate tells you which is which.

Typical Third-Party Costs (Illustrative)
Appraisal$550–$800 (residential)
Credit report$50–$100 per applicant
Title search$200–$500
Lender's title insurance0.3%–0.5% of loan amount
Owner's title insurance (optional but standard)0.3%–0.6% of purchase price
Recording fees / transfer taxesVaries by state and county
Survey (if required)$300–$700
Pest / termite inspection$75–$150
Actual costs vary by state, purchase price, and provider. Arizona has no state transfer tax; Texas and California do - line items differ accordingly.
04Section 4

Bucket 3 - Prepaids and Escrow Setup

These are amounts you'd be paying anyway, just collected early to seed the escrow account (the lender-managed account that pays your property tax and insurance).

  • Homeowners insurance: first year's premium, paid at closing.
  • Property tax escrow: 2–6 months of taxes deposited into escrow depending on the calendar and county.
  • Homeowners insurance escrow: usually 2 months into escrow on top of the first year prepaid.
  • Prepaid interest: the days of interest from your closing date to the end of the closing month.
Prepaids Aren't Really 'Costs'

If closing costs feel high, look at how much is prepaids vs. actual fees. Prepaids are money you'd have paid over the first year anyway. Comparing lenders on 'total closing costs' without separating out prepaids can mislead you.

05

What the Seller Can Pay for You

Seller-paid closing costs are one of the most underused negotiating tools. Rather than a $10,000 price reduction, ask for a $10,000 seller credit toward closing costs - you keep more cash at closing, and it costs the seller the same.

Maximum Seller Credits Toward Buyer Closing Costs
Conventional, primary, LTV > 90%3% of purchase price
Conventional, primary, LTV 75%–90%6% of purchase price
Conventional, primary, LTV < 75%9% of purchase price
Conventional, investment2% of purchase price
FHA6% of purchase price
VA4% of purchase price for 'concessions' + unlimited toward standard closing costs
Seller credits can only be applied against actual closing costs - you cannot 'take the credit as cash'. Any excess must be reduced.
06

What's Actually Negotiable

Almost every lender fee is negotiable, especially if you're a strong file (high credit, strong down payment). Third-party services you can shop are also negotiable, though usually less impactful. Recording fees and transfer taxes are set by government and are not negotiable.

Key points
  • Title insurance: shop title companies; premiums are regulated in some states but total 'settlement fees' vary.
  • Discount points: always optional; run the break-even.
  • Appraisal: rarely negotiable; it's paid to a third party.
  • Government fees: never.
FAQ

Frequently Asked

No. Costs are always paid - either at closing, rolled into the loan balance, or built into a higher interest rate.
Keep learning

More in The Loan Process

Read next

Down Payment Sources and Gift Rules

Savings, gifts, retirement funds, and DPA - what works, what to document, and where borrowers get tripped up.

Start reading
Also in this category

Loan Programs

All loans

Run the Numbers

All calculators

Free Guides

All guides
Ready when you are

Have a Specific Question About Your Situation?

A licensed advisor is a quick call away - no obligation.

Talk to an Advisor Schedule a Consultation (602) 413-5531
Call Now Get Preapproved