You’ve saved for the down payment. You’ve lined up your pre-approval. But now you’re hearing about closing costs and the numbers might be higher than expected. From appraisals to recording fees and title charges, closing costs can sneak up and leave some buyers scrambling. But here’s the good news: you don’t have to cover them all alone.

Thanks to tools like seller credits, lender credits, and even gift funds, there are smart ways to reduce (or even eliminate) certain out-of-pocket costs at closing.

What Are Closing Costs and Why Are They Separate From the Down Payment?

Closing costs are the fees and services required to finalize your mortgage. They typically range from 2–5% of the purchase price and are in addition to your down payment.

Common Closing Costs Include:

• Appraisal Fee – An independent assessment of the home’s market value (required by lenders)
• Recording Fee – Charged by the local government to officially record your deed and mortgage
• Title Insurance & Escrow Fees – Protects ownership rights and handles the legal transfer
• Credit Report & Underwriting Fees – Covers the cost of processing and evaluating your loan
• Prepaid Items – Upfront payment of interest, property taxes, and homeowners insurance

Why These Costs Matter

While closing costs are standard across the industry, not budgeting for them can catch buyers off guard.

It’s not uncommon for borrowers to focus only on the down payment and then realize they’re short on funds when it’s time to close.

But with the right structure in place, you can get help covering many of these costs.

Types of Credits That Help Reduce Closing Costs

1. Seller Credits (a.k.a. Seller Concessions)

A seller credit is when the seller agrees to contribute money toward your closing costs, often negotiated as part of your purchase contract.

This can be a powerful way to cover:

• Appraisal fees
• Title and escrow charges
• Prepaid taxes and insurance
• Recording and notary fees

Pro Tip: Work with your mortgage broker and real estate agent to ensure the credit amount fits within loan guidelines.

2. Lender Credits

In some cases, your lender can offer a credit toward closing costs in exchange for a slightly higher interest rate.

This can be a great option if:

• You need help with upfront cash
• You plan to refinance or sell within a few years
• You prefer to trade a small increase in monthly payment for lower money due at closing

Important: Always run the numbers. Shannon can show you exactly how this plays out over the life of your loan.

3. Gift Funds from Family

Many loan programs allow gift money from family members to be used for both down payment and closing costs.

This can help you cover:

• Title fees
• Loan processing costs
• Recording and government charges

Just be sure to document the gift properly, your loan officer will guide you through what’s needed.

Use Credits Strategically

In competitive markets like Los Angeles, it’s easy to feel like there’s no room to negotiate, but that not necessarily the case. From VA buyers to first-time homeowners and self-employed clients, Shannon helps structure deals that reduce out-of-pocket costs without sacrificing loan quality. Whether that means negotiating a seller credit, using a lender rebate, or reworking your interest rate to create breathing room, strategy matters.

Closing costs are part of every home purchase, but they don’t have to be a roadblock. By understanding the breakdown of fees and working with a mortgage expert to structure the right credits, you can close confidently and affordably.