Closing costs are the fees required to complete a real estate transaction — lender charges, title and closing services, recording fees, prepaid taxes and insurance, and Minnesota's deed or mortgage tax. Buyers and sellers each pay a share, and much of it is negotiable through seller or lender credits.
If you're buying your first home, this is usually the number nobody explained until you were already in the deal. Let's fix that.
What are the five buckets of closing costs?
Closing costs aren't one fee. They fall into five buckets:
1. Lender fees — what your lender charges to make the loan: origination or underwriting fees, the appraisal, the credit report, and any points you choose to pay for a lower rate.
2. Title and closing services — the title search, title insurance, and the closing company's fee for handling the paperwork and the money.
3. Government recording fees — what the county charges to record your deed and mortgage in the public record.
4. Minnesota taxes on the transaction — the state deed tax and mortgage registry tax (details below).
5. Prepaids and escrow — property taxes, homeowners insurance, and interest paid in advance at closing.
What do buyers typically pay in Minnesota?
Buyers typically pay the lender fees, their share of title and closing services, the fee to record the mortgage, the mortgage registry tax, and their prepaids.
Minnesota's mortgage registry tax is 0.23% of the amount you borrow. Hennepin and Ramsey counties add an Environmental Response Fund tax of 0.01%, for 0.24% total (source: Minnesota Department of Revenue, https://www.revenue.state.mn.us/mortgage-tax-rate). By law, the borrower pays it.
In total, typical buyer closing costs in Minnesota range from 2% to 5% of the purchase price, not counting your down payment. On a $350,000 home, that's about $7,000 to $17,500.
A few typical figures:
- Lender fees (origination, underwriting, and processing) — often 0.5% to 1% of the loan
- Appraisal — about $500 to $1,000
- County recording fees — around $46 per document recorded
- Home inspection — about $300 to $1,000 or more, usually paid directly by the buyer before closing rather than at the closing table
What do sellers typically pay?
Sellers typically pay the state deed tax, the cost of clearing any existing mortgage or liens, their share of title and closing services, and any agreed-upon commissions.
Minnesota's deed tax is 0.33% of the sale price. In Hennepin and Ramsey counties, an additional 0.01% applies, for 0.34% total (source: Minnesota Department of Revenue, https://www.revenue.state.mn.us/deed-tax-rate). Under Minnesota law, the seller is responsible for the deed tax (source: Minnesota House Research, https://www.house.mn.gov/hrd/pubs/ss/ssmtdtax.pdf).
What are prepaids and escrow — and why are they due at closing?
Prepaids aren't fees. They're your own future bills, paid in advance. At closing, you'll usually:
- Pay your first year of homeowners insurance
- Fund an escrow account with a few months of property taxes and insurance, so your lender can pay those bills when they're due
- Pay interest from your closing day to the end of that month
Because prepaids depend on your closing date and the home's tax bill, they can be a meaningful part of your cash at closing even though none of it is a "fee."
Is the appraisal part of closing costs?
Usually, yes. The appraisal is a lender fee, and it typically appears on your Loan Estimate with the other lender charges. Some lenders collect it up front, when the appraisal is ordered, rather than at closing — ask yours how they handle it.
What's negotiable in closing costs?
More than most buyers think:
- Seller credits (seller concessions) — the seller agrees to pay part of your closing costs as part of the offer. The amount allowed depends on your loan type.
- Lender credits — you accept a slightly higher interest rate in exchange for the lender covering some of your closing costs.
- Shopping for services — your Loan Estimate lists which services you're allowed to shop for, such as some title services.
- Offer structure — price, credits, and closing date work together. Sometimes a slightly higher price with a seller credit leaves you with more cash in your pocket on day one.
Whether a seller credit makes sense depends on the market and the home. It's something we talk through before we write the offer, not after.
How do I read my Loan Estimate?
Within three business days of applying for a mortgage, your lender must give you a Loan Estimate — a standard three-page form that shows your estimated rate, monthly payment and closing costs. The Consumer Financial Protection Bureau has a line-by-line explainer: https://www.consumerfinance.gov/owning-a-home/loan-estimate/
Three sections to look at first:
1. Page 2, Section A–C: Loan costs — lender fees and the services you can and can't shop for
2. Page 2, Section E–H: Other costs — taxes, government fees, prepaids and escrow
3. Page 2, "Calculating Cash to Close" — the total you should expect to bring
Bring your Loan Estimate to us, and we'll read it together. It's one of the most useful 20-minute conversations you'll have in the entire process.
What's the difference between cash to close and down payment?
Your down payment is the part of the purchase price you're paying yourself. Your cash to close is everything you need to bring to the closing table: down payment, plus closing costs, plus prepaids, minus any credits and your earnest money.
Cash to close is the number that actually matters when you're planning. If you've budgeted only for your down payment, you'll come up short.
If you're still working out your budget, start with our guide: What Can I Afford? A MinnesotaFirst-Time Buyer's Honest Answer
Frequently asked questions
Can closing costs be rolled into the loan?
Sometimes. Some loan programs allow certain costs to be financed, and lender credits can effectively cover closing costs in exchange for a higher rate. Ask your lender what your loan type allows.
Who pays the title insurance in Minnesota?
The buyer typically pays for the lender's title policy, which protects the lender. Who pays for the owner's policy, which protects you, can vary.
How much are closing costs on a $350,000 home?
It depends on your loan, lender, county, and closing date, but here's how Minnesota's two transaction taxes work on a $350,000 home outside Hennepin and Ramsey counties, with a buyer putting 5% down:
- Seller's deed tax: 0.33% × $350,000 = $1,155
- Buyer's mortgage registry tax: 0.23% × $332,500 loan = about $765
Your lender fees, title charges, recording fees, and prepaids are added on top. All in, typical Minnesota buyer closing costs of 2% to 5% work out to about $7,000 to $17,500 on a $350,000 home, or roughly $12,250 at the midpoint, not counting your down payment. Your Loan Estimate will show your actual numbers.
Do sellers pay closing costs for buyers?
They can, if it's negotiated into the purchase agreement as a seller credit. The amount is limited by your loan program, and whether it makes sense depends on the market and the home.
When do I find out my exact closing costs?
You'll see estimates on your Loan Estimate early. Your final numbers come on the Closing Disclosure, which your lender must give you at least three business days before closing. Compare the two — if something changed, ask why.
Questions about your closing costs?
The goal isn't to avoid closing costs — it's to know them before you write an offer, so nothing at the closing table is a surprise. Bring us your Loan Estimate, or reach out if you'd like help getting connected for a pre-approval: https://millamrealestategroup.com/contact