If you’re planning to buy a home this year, there’s one expense you can’t afford to overlook: closing costs. Almost every buyer knows they exist, but not everyone knows exactly what they cover—or how different they can look depending on where you’re buying. Let’s break them down so you know what to expect and how to budget.

 

What Are Closing Costs?

Closing costs are the additional fees and payments due when you finalize your home purchase. Every buyer has them. According to Freddie Mac, these often include:

  • Homeowner’s insurance
  • Title insurance
  • Loan application and origination fees
  • Credit report fee
  • Home appraisal
  • Home inspection
  • Property survey
  • Attorney fees

While not the most exciting part of the homebuying process, these are essential steps to protect your investment and ensure a smooth transaction.

 

National vs. Local: Why the Numbers Look Different

When you Google closing costs, you’ll usually see a national range of 2% to 5% of the purchase price. That’s a useful starting point, but it doesn’t tell the whole story. In reality, closing costs vary widely based on:

  • Local taxes and fees (like transfer taxes and recording fees)
  • Regional service costs (title, appraisal, and attorney work)
  • State laws and tax rates

That means two buyers purchasing similarly priced homes in different states could end up paying very different amounts at closing.

 

What the Numbers Say

Here’s a closer look at how closing costs break down nationally and by state:

National averages:

Average home price: $438,236

Median home price: $409,839

Average closing costs (with taxes/recording): $4,661

Median closing costs (with taxes/recording): $3,513

Average closing costs (without taxes/recording): $3,042

Median closing costs (without taxes/recording): $2,958

Percentage of sales price:

Typical range: 0.5% to 3%

Average: 1.06%

Median: 0.88%

Highest closing costs by percentage:

Delaware (2.99%)

New York, Vermont, Pennsylvania, and Washington, D.C. (all on the higher end, largely due to transfer taxes)

Lowest closing costs by percentage:

South Dakota (0.46%)

Alaska (0.54%)

North Carolina (0.56%)

As you can see, transfer taxes often play the biggest role in whether a state falls on the high or low end of the spectrum.

 

Why This Matters for Buyers

Knowing what to expect ahead of time helps you:

  • Budget more accurately before you start shopping.
  • Avoid surprises at the closing table.
  • Negotiate smarter, since in some cases sellers may agree to help cover part of your closing costs.

 

Final Thoughts

Closing costs may not be the most exciting part of buying a home, but they’re an important one. Because they can vary so much by location, the best thing you can do is talk with your lender and local real estate professionals early in the process. They’ll give you a clearer picture of what to expect in your area, so you can plan with confidence.

If you’re thinking about buying a home this year and want help understanding closing costs—and the entire process—reach out to Scott and the Smolen Team. We’ll walk you through it and help you feel prepared every step of the way.