What Are Closing Costs? Sections A-J Explained
October 20, 2026
Closing costs are the fees and prepaid items you pay to finalize a mortgage, separate from your down payment. They include lender charges (origination fees and points), third-party services (appraisal, title, settlement), government fees (recording fees and transfer taxes) and prepaid items (homeowners insurance, interest and escrow deposits). Your Loan Estimate lists them in Sections A through J on page 2.
What's in each section. Section A, Origination Charges, is what the lender charges to make the loan, such as an origination or underwriting fee and any discount points. Section B, Services You Cannot Shop For, covers third-party services the lender picks, like the appraisal, credit report, flood certification and tax service. Section C, Services You Can Shop For, usually includes the lender's title insurance policy, the settlement or closing fee, and sometimes a survey or pest inspection. Section D adds up A, B and C. Section E is taxes and government fees, such as recording fees and transfer taxes. Section F is prepaids, like your first homeowners insurance premium, prepaid interest and some property taxes. Section G is the initial escrow deposit for future taxes and insurance. Section H is other costs, such as an owner's title policy, HOA fees or a home inspection. Section I totals E through H, and Section J is your total closing costs, with any lender credits subtracted.
Which costs the lender controls, and how to lower them. When you compare lenders, focus on Section A and, indirectly, Section B. Sections E through H depend on the property, your location and your closing date, so they'll look similar no matter which lender you choose. True hidden fees are rare, because every charge has to be listed, but watch for vague items in Section A like processing, admin or document prep (ask what each covers), points you didn't ask for, an unlocked rate, and duplicate charges between Sections B and C. To reduce costs, shop the Section C providers where allowed, ask about lender credits (a credit toward closing costs in exchange for a higher rate), negotiate seller concessions within your loan program's limits, compare Section A on same-day Loan Estimates, and pick your closing date with prepaid interest in mind.
Closing-cost questions, answered. Who pays, buyer or seller? Usually both pay some. Local custom and your purchase contract decide items like transfer taxes and the owner's title policy, while loan costs are generally the borrower's unless the seller agrees to contribute. Are closing costs the same as cash to close? No. Cash to close is closing costs plus your down payment, minus deposits, seller credits and other adjustments. Are closing costs negotiable? Lender charges in Section A and shoppable services in Section C often are, while government fees and taxes are not. Can they be rolled into the loan? On many refinances and some purchase programs, yes, which raises your loan amount and the total interest you pay. Why did they go up? Some fees can change within federal tolerance limits, so ask the lender to name the changed circumstance. Are they tax-deductible? Some items, like points and property taxes, may be. Ask a tax professional.
Closing costs are the lender, third-party, government and prepaid charges listed in Sections A through J of your Loan Estimate. The lender mainly controls Section A, so compare that section and any lender credits across same-day offers, shop Section C services where you can, and ask about anything you don't recognize. Sources: CFPB Loan Estimate explainer; 12 CFR 1026.37(f)-(g); CFPB Your Home Loan Toolkit. General education only. LoFi Rate is an independent matching service, not a lender.