You’ve saved for your down payment, started looking at homes, and worked out a monthly payment that feels comfortable. But have you planned for closing costs?
According to Zillow’s 2026 Consumer Housing Trends Report, 42% of buyers said their final closing costs were higher than expected. Among first-time buyers, that figure reached 51%. These are national survey findings rather than statistics specific to the Fox Valley.[1]
That finding highlights why understanding your upfront expenses matters. It does not necessarily mean those buyers were charged improper fees or that their costs exceeded a lender’s written estimate. It means the final expenses were above what they expected.
My approach is simple: education comes before house hunting. Understanding the money involved can help you move forward with more confidence.
What Are Closing Costs?
Closing costs are expenses associated with obtaining your mortgage and completing the property purchase. They are separate from your down payment.
Your down payment goes toward the purchase price. Closing costs cover financing and transaction expenses, along with items such as prepaid insurance and initial escrow funding when applicable. The exact charges depend on your lender, loan program, property, location, and purchase agreement.[2]
What Can Closing Costs Include?
Your estimate may include several categories. Not every buyer pays every charge.[3]
| Expense |
What It Generally Covers |
| Lender fees |
Charges for originating, processing, or underwriting the mortgage. |
| Appraisal |
An evaluation of the property’s value for the lender. |
| Title and settlement services |
Researching ownership, applicable title insurance, and completing the transaction. |
| Government charges |
Recording charges and applicable transfer taxes. Responsibility depends on local requirements and the contract. |
| Discount points |
An upfront charge paid in exchange for a lower interest rate, if you choose that arrangement. |
| Loan-program charges |
Certain mortgage insurance premiums or funding fees, depending on the loan. |
Ask your lender which services you can shop for and how different financing choices affect your upfront costs.
Why Are Insurance and Escrow Included?
Some money collected at closing pays expenses in advance rather than paying for a transaction service. You may pay your first year of homeowners insurance upfront. You may also pay interest covering the period between closing and the end of that month.
If your loan includes an escrow account, an initial deposit establishes funds the servicer will use toward future tax and insurance bills. These amounts depend on your property, closing date, and loan arrangements.[2]
This is why two buyers purchasing similarly priced homes may need different amounts of cash.
How Much Should You Budget?
The Consumer Financial Protection Bureau gives 2% to 5% of the purchase price as a general closing-cost planning range, excluding the down payment. Treat that as a starting point, not a quote or a maximum. Your lender’s personalized estimate is more useful.[4]
For a hypothetical $350,000 home, that range equals:
| Planning Percentage |
Illustrative Amount |
| 2% |
$7,000 |
| 3% |
$10,500 |
| 5% |
$17,500 |
Those amounts would be in addition to your down payment, before accounting for applicable credits, deposits, or other adjustments. Keep money available for moving, repairs, and emergencies. The goal is to buy a home while maintaining a financial cushion.
Closing Costs and Cash to Close Are Different
Cash to close is the remaining amount you need to bring to complete the transaction. It accounts for your down payment, closing costs, deposits already paid, applicable credits, and other adjustments.[2]
| Item |
Hypothetical Amount |
| Down payment |
$17,500 |
| Closing costs |
$10,000 |
| Earnest money already paid and credited |
−$5,000 |
| Remaining cash to close |
$22,500 |
This simplified example assumes no other credits or adjustments. Your actual closing documents will show your transaction’s figures.
When earnest money is credited toward your purchase, it is money you have already contributed, not an additional charge to pay twice.
Which Documents Help You Prepare?
✓Your Loan Estimate
For most home-purchase mortgages, your lender must provide a Loan Estimate within three business days after receiving your application. It outlines estimated loan terms, payments, and closing costs. Use it to ask questions and compare financing offers, and review fees and upfront costs alongside the interest rate.[5]
✓Your Closing Disclosure
For most home-purchase mortgages, you must receive this document at least three business days before closing. Compare it with your most recent Loan Estimate. Review the cash-to-close amount, credits, and charges, and ask your lender to explain anything unfamiliar or changed.[2]
Five Questions to Ask Before You Buy
Ask Your Lender
- What is my estimated total cash needed for this purchase?
- Which expenses must I pay before closing?
- Which charges can I shop for?
- What could change between this estimate and closing?
- How much savings will I have left afterward?
Keep a written budget that separates money needed before closing, money needed at closing, and savings you want to preserve.
Buying in the Fox Valley? Start With a Clear Plan.
Whether you are buying in St. Charles, Geneva, Batavia, South Elgin, or a nearby community, understanding your upfront costs is an important part of preparing for homeownership.
I believe buyers should feel informed and supported throughout the process. I help you understand the steps and coordinate with your lender and attorney so you know whom to ask about each part of your transaction.
Have questions about preparing to buy?
Message me “CLOSING COSTS” to discuss your goals and connect with a lender for a personalized estimate.
General educational information. Actual costs, loan terms, and eligibility vary by transaction. Examples are illustrative and are not loan offers. Confirm personalized figures with your lender and transaction details with your attorney.
