Buyer FAQs: Closing Costs

What are closing costs?

Closing costs are the fees and expenses you pay to wrap up your home purchase. They cover all the services that make the transaction legal and official—like your loan, title, and government fees. In Minnesota, buyers usually pay these in full at closing (they can’t be rolled into your mortgage).

How much are closing costs in Minnesota?

It depends on the price of the home, where it’s located, and which lender you use. A good rule of thumb is 2–5% of the purchase price. You’ll see the exact breakdown in your Loan Estimate (early on) and your Closing Disclosure (right before closing).

What loan-related fees should I expect?

If you’re getting a mortgage, you’ll likely pay for:

• Origination / processing fee – The lender’s admin costs.

• Discount points – Optional; pay upfront to get a lower interest rate.

• Appraisal – Professional estimate of the home’s value.

• Credit report – Small fee for the lender to pull your credit.

• Application fee – Some lenders charge this to process your loan.

• Underwriting fee – Cost for evaluating your loan application.

• Mortgage insurance – If your down payment is under 20%.

• Lender’s title insurance – Protects the bank if there’s a title problem.

What title-related fees will I pay at closing?

• Title search/exam – A check of public records.

• Owner’s title insurance – Optional; Protects you from future title issues.

• Closing fee – Paid to the title company for running the closing.

• Recording fee – Paid to the county for filing your deed.

• Survey fee – Sometimes needed to confirm property boundaries.

Are there government fees to pay at closing?

Yes. A few key ones are:

• Mortgage Registration Tax (MRT) – Minnesota charges 0.0023 of the mortgage amount when recording your loan. If you’re in Hennepin or Ramsey County, tack on a tiny Environmental Response Fund fee (0.0001).

• Property taxes – You may need to prepay some.

• Transfer taxes / deed tax – Usually paid by the seller in Minnesota, but check your contract.

What prepaid expenses might I owe at closing?

You may need to set aside money upfront for:

• Property taxes

• Homeowners insurance

• Mortgage interest for the rest of the month

• Special assessments (if any)

• If you’re buying a condo or townhouse, you may also prepay HOA dues and one-time move-in fee

Are there other miscellaneous fees?

Yes—things like:

• Courier or wire transfer fees

• Attorney fees (if you hire one)

• Small conservation fees (sometimes)

Do buyers pay Realtor/broker fees?

If you choose to work with a real estate agent, then yes, you will likely pay for that service. All commissions and fees are negotiable. They may also be written into an offer as a seller-paid concession.

How will I know my exact closing costs?

Your lender is required to give you these documents which will show the actual dollar amounts you’ll pay:

• A Loan Estimate (early in the process)

• A Closing Disclosure (a few days before closing)