What are Recurring and Non-Recurring Closing Costs?

For many buyers, closing costs can seem complicated. Buying a home itself is already such a large, complicated purchase, and when closing costs and terms like “recurring” and “non-recurring” are thrown into the mix, it’s easy for buyers to get overwhelmed - even if you've done this before!

Let’s go over recurring and non-recurring closing costs so you understand closing costs when it comes time to close on your new home.

First off, you’ll find information about your recurring and non-recurring closing costs in your loan estimate. When you get approved for a mortgage and start the closing process, your lender will provide you with a loan estimate. Your loan estimate includes specific information about your closing costs and your monthly mortgage payment.

Within your loan estimate, you’ll see that you only have to pay some closing costs once. These are non-recurring costs. These costs include your escrow and closing fees, attorney fees, appraisal and home inspection costs, lender loan fees, a home protection plan, and your title insurance policy.

There are other costs that you may end up having in this category, but the important thing to remember is that these costs are a one-time deal. Once you pay them during closing, you won’t have to pay them again (unless you buy another house).

However, some closing costs need to be paid more than once. These are referred to as recurring costs, since they happen repeatedly. Recurring costs include your property taxes, your private mortgage insurance premium (if applicable), prepaid interest, and flood insurance and fire insurance premiums. Recurring costs are typically wrapped into your monthly mortgage payment. You might not think about them often, but it’s important to know that they’re there.

Your lender should walk you through all of your closing costs and the different elements of your loan estimate. Remember – if you have any questions, all you have to do is ask your lender or your real estate agent. I’m also here to help. My Buyer Guide (link at the top of the page) has some specific local lender recommendations for people I know and trust to get it right. I'm ready when you are.