What Are Closing Costs in Colorado? A Buyer’s Guide

One of the biggest questions I hear from buyers is: "What exactly are closing costs, how much should I expect to pay, and who actually pays them?" Since closing costs can be one of the most confusing parts of the home buying process, let's break it down so you feel confident heading into your purchase.

What's included in closing costs?

Closing costs are all the fees and expenses-outside of your down payment-that you'll need to pay at the time of closing to finalize your purchase. In Colorado, the most common ones include:

• Loan origination fee: 0.5%-1% of the loan amount (about $2,000-$4,000 on a $400,000 loan)

• Appraisal fee: $600-$800

• Credit report fee: $30-$50

• Title search and lender's title insurance: about 0.5% of the purchase price (~$2,000 on a $400,000 home)

• Recording fees (county): $100-$150

• Escrow/settlement fee: $500-$800

• Prepaid items: homeowners insurance ($1,200-$2,000 for a year), a few months of property taxes, and interest from your closing date until your first mortgage payment

• Mortgage insurance (if applicable):

  • FHA loans: 1.75% upfront mortgage insurance premium (often financed into the loan)

  • Conventional loans with less than 20% down: monthly PMI instead of upfront cost

• Discount points (optional): 1% of the loan amount per point if you choose to buy down your interest rate

• HOA transfer or status letter fees (if applicable): $200-$400

How much should you expect to pay?

On average, Colorado homebuyers can expect to pay 2%-4% of the purchase price in closing costs. For example, on a $500,000 home, that's about $10,000-$20,000 in fees and prepaids. Your lender will give you a Loan Estimate early in the process so you'll know your exact numbers, but I always recommend budgeting on the higher side to avoid surprises.

Who pays closing costs in Colorado?

In most cases, buyers pay the majority of closing costs since they're tied to the loan and title transfer. Sellers, however, also have their own expenses like real estate commissions and their share of property taxes.

Can you negotiate closing costs?

Yes-and this is where today's market really matters. In Colorado's current buyer's market, it's common to negotiate seller concessions where the seller pays a portion of your closing costs. This can save you thousands out of pocket at the closing table. Concessions are especially common if a home has been sitting on the market for a while or the seller is motivated. As your agent, I'll help structure your offer to take advantage of these opportunities when it makes sense.

The Truth of the Matter...

Closing costs don't have to be a mystery. By planning ahead and understanding what's included, you'll feel more prepared when it's time to close on your home. And in today's market, you may even be able to negotiate seller-paid concessions to lighten the load.

If you're ready to buy in Colorado and want expert guidance on navigating closing costs and the entire home buying process, let's connect.

Frequently Asked Questions About Closing Costs in Colorado

Do sellers ever pay closing costs in Colorado?
Yes, sellers can agree to pay a portion of the buyer's closing costs through seller concessions. This is negotiated in the purchase contract and is more common in a buyer's market.

How much are closing costs for buyers in Colorado?
On average, buyers should expect to pay 2%-4% of the purchase price in closing costs. For example, a $500,000 home would typically have $10,000-$20,000 in closing costs.

Can closing costs be rolled into the mortgage?
Some costs, like the FHA upfront mortgage insurance premium, can be financed into your loan. Most other fees (like appraisal, title, and escrow) need to be paid at closing.

Are closing costs tax deductible in Colorado?
Generally, closing costs themselves are not tax deductible, but certain items like mortgage interest and property taxes may be deductible. Always confirm with a tax professional.

When do you pay closing costs?
Closing costs are due at the closing appointment, usually paid by wire transfer or cashier's check along with your down payment.