I'm confused? What am I actually paying for in closing costs?

What am I actually paying for in closing costs?

You're paying for multiple services that make your home purchase legally complete and protect both you and the lender. Closing costs cover the work different professionals do to finalize your mortgage and transfer ownership of the home to you.

The largest portions typically go toward loan origination (the lender's work processing your mortgage), title insurance (protecting against ownership disputes), and appraisal fees (confirming the home's value). You'll also pay for attorney or escrow services to handle the legal paperwork, recording fees to file documents with local government, and prepaid items like property taxes and homeowners insurance.

Your Closing Disclosure breaks down each cost by category and shows who receives the payment. Review this document carefully—if any fees don't match your Loan Estimate or you have questions about specific charges, ask your lender for an explanation. Some costs like recording fees are set by local government, while others like origination fees can vary between lenders. Share your Closing Disclosure with your lender and they can walk you through what each service covers and why the fee applies to your loan.