The Costs of Making an Offer

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Making an offer on a home means more than just agreeing to the sale price—there are many other costs and fees to consider. Understanding what you’ll pay upfront is important so you can budget accordingly. Here are some common costs you may encounter.

Mortgage Costs

Down Payment

The down payment is the initial money you invest in your home. Generally, mortgage programs require around 3% down, but you may need a different down payment depending on the situation.

Earnest Money

Earnest money is what you promise to put into an escrow account when you place an offer on a home. The money sits with an escrow company that doesn’t disburse the funds until certain conditions are met.

If you back out of the sale without a contingency (contracted reason to cancel the sale), the seller can keep your earnest money for taking his/her home off the market. If you cancel because of a contingency you have in the contract or the seller breaks the contract, you keep the earnest money.

If you close on the purchase, the earnest money goes toward your down payment. For example, if you were putting down $20,000 and you made a $5,000 earnest money deposit, you would only need to make up the difference of $15,000.

Lender Fees

Lenders charge fees to cover the cost of processing and underwriting your loan. They may charge the fees as a lump sum origination fee or itemize them.

That said, we don’t charge any lender fees,* so if you work with us, you won’t have to consider this additional cost.

Third-Party Fees


Every loan needs an appraisal. This is how the lender determines how much the home is worth. Since the home is the collateral on the loan, lenders must ensure it’s worth at least as much as you’re paying for it. Appraisals cost between $300-$400 depending on the size of the home and its location.


Unlike home appraisals, inspections aren’t always required, but they’re a good thing to have before securing your investment. Home inspection reports let you know if there’s anything seriously wrong with the home—details that may change your mind about buying it. Inspections cost between $200-$500 depending on the location and size of the home.

Title Fees

Title fees are required for all loans. Lenders typically use a title company to do a title search, determining if a home has any liens on it and if the chain of homeownership is legal. Without a clear title, you can’t close the loan. The title company will also issue title insurance for the lender and the owner if you choose to buy it. Lender’s insurance is required, but owner’s title insurance is optional. Most buyers choose to buy it, especially since sellers often pick up the cost. Title insurance usually costs around $1,000 per policy, but that amount varies widely from state to state and depends on the price of your home.

Recording Fee

Title companies also collect a recording fee charged by the government which covers the cost of recording the mortgage and any other required documentation with the county.

Transfer Tax

If your county charges a tax to transfer the home from one party to another, the title company will usually collect the fee and pay it for you.

Additional Taxes and Fees

Home Insurance

Most lenders require you to pay for one year of home insurance upfront by the closing and you’ll need to provide the paid-in-full receipt and proof of insurance. The average U.S. homeowner pays $1,765 a year, but home insurance costs vary by where you live, the size of the house, and the type of coverage you choose.

Real Estate Taxes

Real estate taxes become your responsibility from the moment you take ownership of the home. Since they’re are paid in arrears, your seller will give you a credit for the months he/she lived in the home to cover their tax liability, but moving forward all taxes are your responsibility.

If you’re setting up an escrow account, you’ll fund your account with 2 months of real estate taxes reserves, and depending on the timing of your closing, you may have to put a few more months of taxes in the account so there’s enough to pay the taxes on time.

HOA Dues

If your new home is in a homeowner’s association (or HOA), you may need to pay some dues upfront. From there, you’ll want to budget for dues in whatever increment the HOA charges (e.g., monthly, quarterly, or annually).

Knowing how much it costs to close on a mortgage is important and helps you budget accordingly. While this list isn’t exhaustive, it’s a good start to help you understand what you need to complete the loan process.

*Wyndham does not charge junk fees, application fees, processing fees, or underwriting fees. There may be fees charged directly by Third Parties for services such as, but not limited to, title, settlement, appraisal, taxes, and insurance.


With more than 21 years in the industry, we’re a leading fintech mortgage lender saving current and potential homeowners money and time through transparent rates, zero junk lender fees*, and technology that automates over five million tasks each month. We’ve served over 100,000 borrowers, boast a 98% customer satisfaction rating and 4.9 stars on thousands of online reviews, and provide a “mortgages without migraines” experience. (*Note: Wyndham does not charge junk fees, application fees, processing fees, or underwriting fees. There can be fees charged directly by Third Parties for services such as, but not limited to, title, settlement, appraisal, taxes, and insurance.)

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