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Hole 16 · Back Nine — Execute

Closing Costs

Closing costs typically run 2-5% of the purchase price and catch first-time buyers off guard if they are not budgeted for early. This hole breaks down what you are actually paying for at closing and how seller credits can offset part of the bill.

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Written by Andrew Moran · Loan Officer · GoRascal | NMLS #1264497

What buyer closing costs actually pay for

Closing costs typically run 2-5% of the purchase price, on top of your down payment. The bulk covers loan origination, title insurance, escrow and settlement fees, recording fees, and prepaid property taxes and insurance. Some costs — like your appraisal and inspection fees — you may have paid earlier in the process, so they're not money due at the table.

  • Loan origination: roughly 0.5-1% of your loan amount.
  • Title insurance and escrow/settlement fees together typically run $2,500-$4,000 in Washington.
  • Prepaid taxes and insurance amounts vary by county and your closing date.

Washington keeps one big cost off the buyer's plate

Washington's Real Estate Excise Tax (REET) — a real, often sizable transaction tax — is always paid by the seller, never the buyer. It's one line item you can cross off your closing-cost worksheet entirely. It's still worth knowing about, though: REET affects what a seller nets, which shapes how firm they'll be on price.

  • REET is graduated by sale price tier and is always the seller's legal obligation in Washington.
  • Buyer closing costs are a separate, unrelated set of fees — REET never appears on your side.
  • Knowing what REET costs a seller can inform how much room there is to negotiate.

Seller credits and lender credits can offset your costs

A seller concession is money the seller agrees to credit toward your closing costs, usually negotiated into the offer or after inspection. A lender credit works differently: you accept a slightly higher interest rate in exchange for reduced upfront fees. FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) loans allow seller contributions up to 6% of the price.

  • Seller concessions are typically negotiated in the initial offer or as part of an inspection response.
  • Lender credits trade a higher rate for lower fees — model both before deciding.
  • FHA and VA loans permit some of the highest seller-contribution limits among common loan types.

Budget cash-to-close, not just the down payment

Cash-to-close is your down payment plus closing costs, minus any earnest money already on deposit and any seller credits. Earnest money is applied toward this total at closing — it's not an extra cost stacked on top. Ask for a written closing-cost estimate early, and confirm the final number against your Closing Disclosure before you show up to sign.

  • Cash-to-close = down payment + closing costs − earnest money already deposited − seller credits.
  • Your lender must deliver a Closing Disclosure at least three business days before closing.
  • Confirm your final wire amount against the Closing Disclosure, not an earlier estimate.

Mastery check

Prove it out before you move on.

Caddie

Before you play through — quick read of the green:

4 quick questions. Get all but one right and this hole is marked played. Unlimited retries — there's no penalty for missing one.

Question 1 of 4

Roughly what percentage of the purchase price should buyers budget for closing costs?

Question 2 of 4

In Washington, who pays the Real Estate Excise Tax (REET) on a home sale?

Question 3 of 4

What's the difference between a seller concession and a lender credit?

Question 4 of 4

How is your cash-to-close calculated?

Still stuck? Ask the Caddie.

Hole 15: Appraisal & Financing ContingenciesHole 17: Closing Week