Paying for closing costs is one of the last steps in buying a home — covering all fees associated with your transaction.

Closing costs encompass the variety of expenses associated with homebuying and selling, such as the appraisal, taxes, title insurance, credit report fee, origination fee and other prepaid costs until your first payment is due. These fees will typically cost 2% to 5% of the total home purchase price. 

Keep in mind that you might be able to find a program to help with these expenses or negotiate with the seller to cover some of these costs.

• How much are closing costs?
• Who pays closing costs?
• Can I add closing costs to my loan?

How much are closing costs?

Closing costs typically range between 2% and 5% of the total home purchase price. These costs come on top of your down payment, and you’ll need to pay these third-party costs upfront before you close on your mortgage. 

Depending on where you live, first-time homebuyer programs are available to help you pay for closing costs. Many housing finance agencies offer some form of down payment and closing cost assistance to qualified buyers who meet income and purchase price requirements. 

You may also be able to find programs for forgivable grants, deferred payment second mortgages and fully amortizing second loans. Down payment assistance programs are often targeted toward certain groups, such as first-time homebuyers, active military members, veterans or teachers. 

Who pays closing costs?

Generally, homebuyers pay most of the expenses associated with closing costs. But, depending on your contract or state of residence, these expenses may vary.

Home sellers usually pay for the real estate agent commissions for both the sellers and the buyers.

What are some common closing costs for homebuyers?

• Loan origination fee — What the lender charges the borrower for administrative services, such as processing the application, underwriting and funding the mortgage loan.  
• Credit report fee — Typically less than $30, this is a fee a lender can collect before providing you with a loan estimate.  
• Appraisal fee — Service fees covering an assessment determining how much your property is worth. 
• Home inspection fee — Typically ranging between $300 and $500, a home inspection provides an assessment of the physical condition of a house.
• Title service fee — Costs related to the premium for the lender’s title insurance policy and lender’s service fees for issuing title insurance.
• Recording fee — Fees your local government issues for recording your deed, mortgage and documents related to your home loan. 
• Prepaid expenses — Includes property taxes, interest until your first payment is due and homeowners insurance. Your mortgage lender may set up an escrow account to pay these expenses. Depending on where you live, an escrow account could be required by law. 

What are some common closing costs for home sellers?

• Real estate agent commissions — Accounts for typically 5% to 6% of the sale price.
• Transfer tax — A tax on the transaction required by state or local government.
• Seller credits — Funds that the seller contributes to cover some of the buyer’s closing costs or repairs needed.
• Attorney fees — Depending on your state’s laws, you may not be required to have an attorney present at closing. However, it’s probably a good idea to have an attorney represent you and answer any questions before and at closing. 

Can I add closing costs to my loan?

If you don’t pay closing costs upfront, you may pay for them as part of your mortgage loan. 

With a no-closing-cost refinance, a lender may offer you lender credits — also called negative points — found in Section J on the second page of your loan estimate. Lender credits represent money the lender provides to cover closing costs upfront. 

This may be appealing if you don’t have the cash on hand for closing costs. But keep in mind that since a no-closing-cost refinance will add expenses to your loan balance, you’ll have a larger loan to pay back.

What’s next?

When you’re preparing to buy a home, remember that your lender must send you closing disclosure documents at least three business days ahead of time. Make sure to review these documents thoroughly. 

You should also compare your closing disclosure to your most recent loan estimate and get any questions or discrepancies resolved by your loan officer. 

Estimate your closing costs

Use our closing costs calculator to get a better idea of how much your closing costs could be when buying a home.

Money orders offer an alternative to cash and checks. They give you immediate proof of funds, making for useful gifts, purchase options or ways to pay bills.

A money order is a lot like a check, and both forms of payment require similar information. But with a money order, instead of pulling funds from your account when the recipient cashes the check, your money is taken out immediately with your purchase of the order.

Money orders never expire. But depending on the terms and conditions and where you purchased a money order, you’ll generally be subject to fees after one year.

• Steps to get a money order
• Where do you get money orders?
• Should I get a money order?
• How to replace a lost, stolen or damaged money order

Steps to get a money order

After deciding on the money order amount, you’ll then go to any money order location with cash, debit or a traveler’s check.

Write the recipient’s name or business you are addressing the money order. Make sure that all of the information, including spelling, is correct — you can’t make changes after the money order is processed.

Keeping in mind that you’re the purchaser, use your full legal name and current mailing address to write in the appropriate information in fields which may be titled, “from,” “sender,” “remitter” or “purchaser.”

When signing the money order, make sure that you sign the front and leave the back blank for the receiver who’ll later use this area to cash their money order. You may fill in the field where there is room to accurately label the payment’s purpose, but it’s not necessary to process the payment.

You can send the money order to the receiver in the same way you would a check. And a money order is just as valuable as cash, so you may want to hold on to your detachable receipt for your records in case your money order is lost, misplaced or stolen. Keeping your receipt will also allow you to track your transfer information and confirm when the money is deposited by the recipient.

What is required to buy a money order?

While this may vary by location, you’ll typically need to provide a valid government-issued ID in order to endorse a money order purchase.

At any money order purchase location, acceptable primary forms of identification generally include U.S. Government IDs and passports. USPS will also accept matrícula consular cards and Nexus cards.

Is a money order the same as cash?

Money orders are similar to cash because you pay for them upfront and they aren’t linked to a bank account.

You can purchase a money order with cash, a traveler’s check or your debit card, but contrary to a cash payment, there’s typically a limit of $1,000.

Can a money order be purchased with a credit card?

It’s not easy to find places that will accept credit cards as payment for a money order, and your credit card issuer may process this transaction as a cash advance, which can be costly. It’s more common to pay for a money order with cash or a debit card, and you’ll likely save money in fees and interest rates if you choose to pay the full amount upfront.

Where do you get money orders?

You can get a money order from various locations, including banks, grocery stores and other check-cashing locations.

Walmart

Money orders are available for purchase with your debit card or cash at any Walmart Supercenter or Neighborhood Market at the Customer Service Desk or Money Services Center. Along the money order’s payment amount, you’ll pay a maximum fee of $1. For purchases over $1,000, you will need a valid government-issued photo ID.

Western Union

Money orders can be purchased at any participating Western Union location. Western Union provides a price estimator for any fees that may be associated with sending money orders.

U.S. Postal Service

You can purchase a money order at any USPS location. Most money order fees will cost less than a few dollars.

Should I get a money order?

If you don’t have a checking account, you may benefit from using a money order as a method to transfer funds. But a money order makes the most sense when an individual, business or organization doesn’t accept electronic payments.

For example, if you’re buying a car from someone you aren’t familiar with, they might ask you to pay with a money order to ensure that you can cover the full cost of your purchase.

Money orders are also handy in situations where personal checks aren’t accepted, or there’s a need for you to cover an expense upfront.

While most recipients of money orders will generally receive funds through cash payment, the option to electronically purchase money orders is currently lacking. This means your money order must be purchased in person.

Buying a money order in person, mailing the payment and potentially losing or having a payment stolen are major downsides. To top it off, a location may not always have enough money on hand to cash a money order.

Here are some alternative options for payments to consider.

• Checks — Checks can be a safer option than money orders or cash. In the case that your signature is forged or a check is lost or stolen, the money in your account will remain protected. Checks are also convenient if you need to send funds by mail. After writing a check, your money will stay in your checking account until the person who receives it makes the deposit.
• Cashier’s checks — This may be the best option if you’re making a big purchase. Your cashier’s checks are guaranteed by the bank or national retailer that issues them, immediately taking the money from your account for the cashier’s check and subsequent fee. While there’s often no limit on a cashier’s check, if the check is ordered online, a bank may impose a maximum limit.
• Digital payment apps: Platforms like Venmo or Paypal simplify the process of sending money through quick and simple electronic payments. In contrast to checks, Venmo and PayPal allow payments using credit cards for a fee.

How to replace a lost, stolen or damaged money order

Given the potential risk of sending a money order, take advantage of your money order issuer’s tracking system with the help of your receipt. In the event your money order is defective or damaged, take the money order back to the issuer and it’ll likely issue you a replacement.

Generally, you can track your money order by visiting the issuer’s website. And to request either a replacement or refund, you can take your money order receipt to the location of the original purchase location. But note that in some cases, you may not be granted a refund or replacement.