Trying to figure out how much cash you will need to close on a Knoxville home? You are not alone. Closing costs can feel confusing, especially when you are balancing a down payment, inspections, and moving plans. In this guide, you will learn what closing costs include, how much to budget in Knox County, what is negotiable, and simple ways to save. Let’s dive in.
What closing costs include
Closing costs are the one-time fees and prepaids you pay at settlement in addition to your down payment. They usually fall into three buckets: lender fees, title and settlement fees, and prepaids placed into your escrow account.
Federal rules help you plan. Your lender must provide a Loan Estimate within three business days of your application and a final Closing Disclosure at least three business days before closing. These documents list every charge so you can review and ask questions.
How much to budget in Knoxville
A simple rule of thumb: plan for 2% to 5% of the purchase price for buyer closing costs, not counting the down payment. You will also prepay the first year of homeowners insurance and make initial deposits into your escrow account for taxes and insurance.
Your exact total depends on the home price, loan type, title insurance rates, closing date, property taxes, and how much you choose to finance. Program fees, like FHA, VA, or USDA upfront charges, also affect the bottom line.
Common line items and typical ranges
Loan-related costs
- Origination or lender fee. Often 0% to 1% of the loan amount or a flat fee. Sometimes negotiable or offset by lender credits.
- Discount points. Optional. One point equals 1% of the loan amount and can lower your rate.
- Appraisal. Typically $350 to $800, depending on the property.
- Credit report and underwriting. Small flat fees. Some lenders bundle these into the origination.
- Mortgage insurance or program funding fees. If you put less than 20% down or use FHA, VA, or USDA, expect mortgage insurance or an upfront funding fee per program rules.
Title and settlement fees
- Title search and exam. Verifies clear ownership and checks for liens.
- Title insurance. Lender’s policy is required. An owner’s policy is optional protection for you. Premiums depend on the purchase price and follow rate schedules.
- Settlement or closing fee. Paid to the title or closing company for handling the transaction.
- Courier or disbursement fees. Small administrative charges.
Local custom on who pays the owner’s title insurance can vary. In some transactions sellers cover it, while in others buyers do. Confirm what is typical for your contract.
Government and recording fees
- Recording fees. Knox County charges to record the deed and mortgage. Amounts are set by county offices and can change. Your title company will quote the exact figure.
- Transfer or documentary taxes. State or county transfer taxes may apply. Your title company will identify any state-level taxes and who pays them per contract.
Prepaids and escrow deposits
- Property taxes. You will prepay a portion based on the closing date and tax calendar.
- Homeowners insurance. Most lenders require the first year paid at or before closing, plus a couple of months in escrow.
- Prepaid interest. Covers interest from your closing date to your first payment.
- Initial escrow deposits. Lenders usually collect 2 to 6 months of taxes and insurance to seed your escrow account.
Inspections and third-party reports
- General home inspection. Typically $300 to $600, depending on size and age.
- Specialized inspections. Radon, pest, chimney, septic, sewer scope, or other checks as needed.
- Survey. If required, expect several hundred dollars or more based on scope.
Other possible charges
- HOA transfer and document fees if the home is in an association.
- Attorney fees. Not always required in Tennessee. Some buyers choose an attorney for review.
Quick estimate example
Below is an illustrative example to show how costs can add up. Your actual numbers will come from your lender and title company.
Illustrative example for a $300,000 purchase:
- Origination and lender fees: $1,500
- Appraisal: $500
- Title and closing fees, including lender’s policy: $1,200
- Recording and county charges: $150
- Inspection: $450
- Prepaids and initial escrow deposits: $2,000
- Estimated total: about $5,800, which is roughly 1.9% of the price. Depending on title premiums, escrow requirements, and program fees, your total could land closer to the middle or high end of the 2% to 5% range.
Local Knoxville notes to confirm
- Owner’s title insurance. Who pays often depends on local custom and negotiation. Ask your agent and title company.
- County recording fees. Set by Knox County offices. Your title company will provide the exact current amount.
- Property tax calendar. The timing affects how much tax is collected at closing and how your escrow is set up.
- Settlement practices. Tennessee closings commonly use title companies or escrow agents. An attorney may or may not be present.
- Lender marketplace. Compare written Loan Estimates from at least two lenders that do business in Knoxville.
Who pays what and what is negotiable
Buyers typically pay lender fees, the appraisal, inspections, the lender’s title policy, and initial escrow deposits. Sellers cover their side of closing costs and sometimes the owner’s title policy. Many items are negotiable and depend on your purchase contract.
Seller concessions can reduce your cash to close, but programs have limits. As general guidance to discuss with your lender: FHA often allows up to 6% in concessions, VA commonly allows up to 4% for certain items, USDA often allows up to 6%, and conventional loan caps vary by down payment and can range from about 3% to 9%. Always confirm current limits with your lender for your specific loan.
How to manage or reduce your costs
- Shop at least two lenders and compare Loan Estimates line by line.
- Request seller concessions or a closing cost credit, within program limits.
- Ask about lender credits in exchange for a slightly higher rate.
- Roll certain fees into the mortgage if the program allows and the numbers make sense for you.
- Use e-recording or electronic document options when available to reduce courier or processing fees.
- Start with a general home inspection before ordering specialty tests unless your lender requires them.
What to expect with your disclosures
- Loan Estimate. You will receive this within three business days of applying for your mortgage. It provides a clear estimate of closing costs and cash to close.
- Closing Disclosure. You will receive this at least three business days before closing. It lists final amounts due and who pays each item.
- Earnest money. Your deposit is normally credited toward your funds to close.
- Final funds. Plan to wire funds or bring a cashier’s check according to instructions from your title company.
Buying in Knoxville should feel exciting, not confusing. When you understand closing costs early, you can set a realistic budget, negotiate with confidence, and avoid last-minute surprises. If you want a local walk-through of your numbers or help comparing Loan Estimates, connect with Mandy B. Street for clear, step-by-step guidance.
FAQs
What are typical buyer closing costs in Knoxville?
- Plan for about 2% to 5% of the purchase price for closing costs, plus prepaids like your first year of homeowners insurance and initial escrow deposits.
Can I roll closing costs into my mortgage in Tennessee?
- Sometimes. It depends on your loan program and lender guidelines. Some fees can be financed or offset by lender credits, while others must be paid at closing.
Are seller-paid closing cost credits common in Knoxville?
- It depends on market conditions and your contract. Credits are negotiable but subject to program limits, so coordinate with your agent and lender.
Who usually pays the owner’s title insurance in Knox County?
- It varies by local custom and negotiation. Ask your title company and review your contract to confirm who is paying.
When will I know my exact cash to close?
- Your lender must send a Closing Disclosure at least three business days before closing with final numbers. Confirm wiring or check details with your title company.
Are any closing costs tax deductible for buyers?
- Most closing costs are not deductible. Mortgage interest and points may be deductible when you itemize. Consult a tax professional for advice on your situation.
