Understanding Your Cash to Close

One of the most common questions I hear is: “What exactly am I paying for at the end?” Your total cash to close is generally made up of two distinct categories: Closing Costs (the one-time fees to get the loan) and Prepaid Items (the costs of owning the home).

Clear communication is my priority. Below is a breakdown of what to expect so there are no surprises when you reach the finish line.

💸 Closing Costs

The “Transaction Fees”

Think of these like a restaurant bill—one-time payments for the work required to finalize your loan. Once they are paid, they are gone.

🏠 Pre-paid Items

The “Ownership Reserves”

This is your money being set aside for future taxes and insurance. You are simply paying these bills in advance to build your escrow cushion.

At-A-Glance Comparison

Closing Costs (Fees) Pre-paids (Your Money)
Loan Origination & Processing Homeowners Insurance (1st Year)
Appraisal & Credit Report Property Tax Reserves
Title Search & Title Insurance Pre-paid Daily Interest
Recording & Notary Fees Initial Escrow Cushion

*Items vary based on property location and loan program specifics.

The Secret to Comparing Loan Estimates

Expert Tip From Kevin

“When you’re shopping for a mortgage, don’t get distracted by the total ‘Cash to Close’ number. Remember: Third-party fees (Title, Escrow, Appraisal) and Pre-paid items (Taxes, Insurance) will be virtually the same no matter which lender you choose.“

“To find the best deal, focus exclusively on the Lender Fees (origination) and the Interest Rate/Points. Some lenders ‘lowball’ their estimates by under-quoting taxes or title fees they don’t control—don’t let that trick you. Compare the things the lender actually controls, and you’ll see the true cost of your loan.”

Closing Cost Details (Page 2)

SHOP THESE

A. Origination Charges
Lender Fees, Points, Processing
$X,XXX

*Kevin’s Note: This is where lenders vary. Compare these numbers closely!

B. Services You Cannot Shop For
Appraisal, Credit Report, Tax Service
$XXX

YOUR RESERVES

G. Pre-paids & Initial Escrow
Homeowners Insurance, Property Taxes
$X,XXX

*Kevin’s Note: This is your money staying in your account. It’s not a “fee.”

Ready to see your actual numbers?

Closing costs aren’t a guessing game. From the loan type to the specific day you sign, every variable changes your bottom line. I specialize in building Custom Loan Blueprints that show you exactly what to expect—no surprises, no hidden fees.

📝Fill out the form to the right (or below on mobile), and I’ll personally reach out to provide a detailed breakdown tailored specifically to your homebuying goals.

Want a local expert to help you find the right loan?

NMLS 1534892 | Pennington Lending Services Inc.

Closing Costs FAQ’s

How much should I actually budget for closing costs?

A safe rule of thumb for Washington State is to budget between 2% and 5% of the home’s purchase price. This is in addition to your down payment. The exact amount depends on the specific county taxes and the time of month you close (which affects your “pre-paid” daily interest).

Can I roll my closing costs into the loan?

On a purchase, you generally cannot “roll” the costs into the loan balance like you can with a refinance. However, we can often negotiate a Seller Credit, where the seller pays these costs for you, or I can provide a Lender Credit to help offset your out-of-pocket expenses in exchange for a slightly different interest rate.

Why do my "Pre-paids" change based on my closing date?

This is a common point of confusion! Pre-paids include “interim interest”—the interest that accrues from the day you sign until the end of that month. If you close on the 2nd of the month, you pay for 28 days; if you close on the 28th, you only pay for 2. This is why your “Cash to Close” number can shift slightly as your closing date moves.

Are these fees tax-deductible?

While I’m a mortgage broker and not a CPA, typically items like mortgage points (if you paid them to lower your rate) and property taxes may be deductible. However, standard “transaction fees” like the appraisal or credit report generally are not. I always recommend checking with your tax professional for your specific scenario!