Closing Costs Explained: Who Receives Each Fee

Page 2 of a Closing Disclosure looks like a bill. It is closer to a distribution list. Roughly a dozen separate parties are named on it, most of whom have never spoken to you, and the single most useful reading habit is to stop asking what a line costs and start asking who ends up holding it.

The headings are not your lender's house style. They are set by 12 CFR 1026.38(f) and (g), and the capital letters everyone quotes at each other come from model form H-25. Section 1026.38(t)(2) makes those letters part of the label rather than decoration, and for a federally related mortgage loan 1026.38(t)(3)(i) requires the form itself; every other covered transaction gets headings "substantially similar" to it. Reading the CFPB's own blank H-25 on 23 August 2026, page 2 runs A Origination Charges, B Services Borrower Did Not Shop For, C Services Borrower Did Shop For, D Total Loan Costs, then E Taxes and Other Government Fees, F Prepaids, G Initial Escrow Payment at Closing, H Other, I Total Other Costs, and J Total Closing Costs. Standardized labels are the reason a stranger can tell you what Section E is without seeing your file.

Three columns settle half the questions before you reach an amount

Both closing cost tables are printed with columns showing whether a charge is borrower-paid at or before closing, seller-paid at or before closing, or paid by others. That third column is where lender-paid broker compensation and builder or agent contributions land.

Then there is the requirement that makes the whole page readable. Sections B, C and H all have to carry the name of the person ultimately receiving the payment — 1026.38(f)(2), (f)(3) and (g)(4). Not the name of the company that ordered the service. The name of whoever banks the money. Read the names column first and the amounts second, and a surprising number of lines explain themselves.

A and B: money that stops at the lender, and money that only passes through

Section A, Origination Charges covers what you pay each creditor and loan originator for originating and extending the credit — 1026.38(f)(1), which itemizes the charges defined at 1026.37(f)(1). Application, underwriting, processing, rate lock. Discount points get the first line, labeled "____% of Loan Amount (Points)", and if you bought no points, comment 37(f)(1)-4 has the creditor leave both the percentage in the label and the dollar amount blank rather than print a zero.

Section A also holds something people miss: compensation the creditor pays to a third-party loan originator, disclosed with that originator's name. If a broker arranged your loan and you paid the broker nothing directly, the payment still shows here, in the paid-by-others column.

Section B, Services Borrower Did Not Shop For, is third parties the lender chose. Appraisal, credit report, flood determination, tax service. The names printed beside those amounts are the appraisal management company, the flood vendor, the credit reseller — and occasionally an entity affiliated with the lender, which is worth noticing. Whether a charge sits in A or in B changes nothing about your right to ask a question, but it tells you a great deal about where the money went. Which increases you can actually push back on is a separate matter, decided by the tolerance groups covered in Loan Estimate vs Closing Disclosure.

C, and why the title company's bill lands in two different blocks

Section C, Services Borrower Did Shop For, holds required services you selected. If your lender gave you a written list of providers and you picked someone from it, the charge moves up to Section B instead; pick someone off-list and it stays in C. Settlement or closing fees, the survey, and the lender's title insurance policy usually sit here.

The title premiums are where the form stops matching anybody's invoice.

Comment 37(f)(2)-4 requires the lender's policy to be quoted at the full premium rate, with no adjustment for buying an owner's policy at the same time. The owner's policy then goes in Section H, and comment 38(g)(4)-2 sets its arithmetic: full owner's premium, plus the simultaneous-issue premium for the lender's coverage, minus the full lender's premium.

Run it with illustrative figures. Full lender's policy $1,150. Full owner's policy $1,850. Simultaneous-issue rate for the lender's coverage $150. Your form shows $1,150 in Section C and $850 in Section H. The title company collects $2,000, which is exactly what the two disclosed lines add up to, and neither figure alone appears anywhere on its rate sheet. Nothing is wrong. The disclosure is built that way so the optional purchase carries its own visible price. What that owner's policy is buying you is decided by the exceptions listed in the title commitment, not by the premium.

E: one heading, two levels of government, sometimes two separate checks

Section E, Taxes and Other Government Fees, is the block most often read as a single lump. It holds two unrelated things.

The first line is recording fees, and 1026.38(g)(1)(i)(A) requires the deed and the security instrument to be broken out separately before the columns; on form H-25 they appear as "Deed" and "Mortgage". This money goes to the county office that indexes the documents, and it is priced by the document rather than by your purchase. One county's published numbers show the scale. Deschutes County, Oregon charges a flat fee to record a deed or mortgage that rose from $97 to $102 on 1 July 2026 when its Land Corner Preservation fee went up under Ordinance 2026-003, plus $5 for each additional page. That is one Oregon county and nothing more; your own county sets its own schedule and publishes it. Whatever the number is, it has nothing to do with your loan size.

The lines beneath are transfer taxes, itemized with the name of the government entity assessing each one. Priced off the sale price or the loan amount, they can be an order of magnitude larger:

• Pennsylvania imposes 1 percent on the value of the real estate, collected by the county Recorder of Deeds, usually alongside a local realty transfer tax, and grantor and grantee are jointly and severally liable for it (PA Department of Revenue). Montgomery County, Pennsylvania makes the split literal: recording a deed there requires two separate checks, one for the recording fee and one for the realty transfer tax.
• In Florida the same closing produces up to three of these. Documentary stamp tax on the deed is 70 cents per $100 of consideration in every county but Miami-Dade, where it is 60 cents plus a 45-cent surtax that is not due on a document transferring only a single-family dwelling. The promissory note is taxed separately at 35 cents per $100, capped at $2,450, and the recorded mortgage at 35 cents per $100 with no cap at all (Florida Department of Revenue).

Washington shows how far a graduated rate can carry the number. Its state real estate excise tax, on the structure effective for sales from 1 January 2023, is 1.10 percent on a sale price of $525,000 or less, 1.28 percent to $1,525,000, 2.75 percent to $3,025,000, and 3 percent above that, and the local REET is calculated separately and added to the state rate (Washington Department of Revenue). Three states, three different bases, and none of these figures travels to a fourth.

Who pays which is a matter of state law and local custom, not of the disclosure. Comment 37(g)(1)-5 is blunt about one consequence: transfer taxes the seller pays never appear on your Loan Estimate at all, but they do appear on the Closing Disclosure, in the seller's column. A line materializing in Section E between your two documents is not automatically a fee somebody slipped in.

The test for which bucket an item belongs in comes from comment 37(g)(1)-1, and it is arithmetic rather than vocabulary. A fee of $20 plus $3 per page over three pages is a recording fee. A fee of $1,250 that turns out to be 0.5 percent of the loan amount is a transfer tax wearing a different name.

F and G: your own money, in two buckets, one of which nobody spends today

Section F, Prepaids, is four fixed lines in a fixed order: homeowner's insurance premium for a stated number of months, mortgage insurance premium for a stated number of months, prepaid interest, and property taxes for a stated number of months. The interest line carries its own math inside the label, and the Closing Disclosure writes it as a rate per day across dates — "Prepaid Interest (_ per day from _ to ____)" on H-25. The Loan Estimate version of the same line is written differently, as a per-day amount for a number of days at a stated percentage, which is the wording 1026.37(g)(2)(iii) prescribes.

Take an illustrative $412,000 loan at 6.5 percent: on a 365-day basis that is about $73.37 a day, and some lenders divide by 360 instead, which moves the figure. Close on the 26th of a 30-day month and you are prepaying five days, roughly $366.85, covering the gap until interest starts running toward your first monthly payment. Close on the 2nd instead and that line nearly disappears. It is the one closing cost a calendar can genuinely shrink, and comment 38(g)(2)-3 confirms the honest answer when there is no gap at all: $0.00. Comment 38(g)(2)-2 allows the figure to be negative in the cases where the arithmetic runs the other way.

Section G, Initial Escrow Payment at Closing, is not a cost in the ordinary sense. It is a deposit into the account your servicer will hold, itemized as a monthly amount times a number of months, and it comes back out to pay the same tax and insurance bills that Section F just prepaid a slice of. The last line in the block is a negative number labeled "aggregate adjustment", computed under 12 CFR 1024.17(d)(2). It exists because adding up each item separately overshoots what the account is allowed to hold. The cushion ceiling is one-sixth of the year's anticipated disbursements, which is two months, and the negative line drags the total back under it.

The two blocks together are the reason closing costs feel larger than they are. Part of that money is still yours. It has simply moved to a different address.

H: the catch-all where the largest single line often hides

Section H, Other, collects costs that are part of the closing but not required by the lender: real estate brokerage fees, HOA charges paid at consummation, home warranties, inspections you ordered under the purchase contract. Comment 38(g)(4)-4 requires a commission line to state the total paid to any brokerage regardless of who was holding the earnest money, with any extra brokerage charges itemized separately and the recipient named.

Two labeling rules make the block scannable. The owner's title insurance line has to begin with "Title —" under 1026.38(g)(4)(i), the same prefix carried by the title services sitting up in B and C. And the parenthetical "(optional)" is reserved for genuinely separate products you could decline — the owner's policy, a home warranty, credit insurance — which is why comment 37(g)(4)-4 puts a brokerage commission in this section without one. Nobody is offering it to you.

What page 2 leaves out on purpose

Section J, Total Closing Costs (Borrower-Paid), is not the number you wire. Lender credits appear there as a negative, and 1026.38(h)(3) requires a credit that is refunding a tolerance overage to say so on its face.

Everything else that determines the wire lives on page 3, under Summaries of Transactions, and it is a subtraction rather than a total. Section K adds up what is due from you — the sale price, your closing costs carried over on a line that reads "Closing Costs Paid at Closing (J)", and the prorations under "Adjustments for Items Paid by Seller in Advance". Section L adds up what is already covered: the loan amount, any "Seller Credit", and the "Deposit" line that credits back your earnest money, held all this time by someone whose role is worth understanding well before this page arrives, as covered in earnest money: who holds it. Cash to Close is K minus L.

Anything you already paid stays out of that arithmetic in one of two ways. A fee settled before closing — the appraisal you put on a card in week one — sits in the Borrower-Paid Before Closing column on page 2 and comes back as a negative on the "Closing Costs Paid Before Closing" line of the Calculating Cash to Close table. A charge in the Summaries tables that was never paid out of closing funds is instead marked "Paid Outside of Closing" or "P.O.C." together with the name of the party who paid it, which 1026.38(j)(4)(i) requires.

A narrow sequence works better than a full read. Check the names in B, C and H. Check that E splits cleanly into one county fee and one tax. Treat F and G as your money rather than someone's revenue. Take Cash to Close from page 3 and nowhere else. Anything still unexplained after that is worth an email, and the email works better when it quotes the section letter and the payee name instead of the amount.