Closing Costs

Closing costs refer to the expenses over and above the price of the property that buyers and sellers incur to complete a real estate transaction. These costs are paid at the closing of the real estate transaction. The closing is when the title of the property is transferred from the seller to the buyer, and it usually takes place at a title company, attorney's office, or escrow company.

Closing costs vary widely based on where you live, the property you buy, and the type of loan you choose. Here is a list of potential closing costs:

Loan origination fees: These are charged by the lender for processing the loan.

Appraisal fees: The cost to have the property professionally appraised to determine its fair market value.

Title insurance: This protects the lender (and sometimes the owner) against any issues with the property’s title, such as liens or ownership disputes.

Escrow fees: If an escrow account is set up to cover future insurance and tax costs, the lender may require funds to be deposited at closing.

Recording fees: Charged by a city or county for recording the real estate purchase and sale in the public records.

Underwriting fees: These are the costs of evaluating and verifying the loan application.

Credit report fees: The cost of pulling a credit report from one or all three of the major national credit bureaus.

Survey fee: The cost for confirming the property boundaries.

Attorney’s fees: Some states require a real estate attorney to be present at closing.

This is not an exhaustive list, and some costs are negotiable and can be paid by either the buyer or the seller. The lender is required to provide a Loan Estimate that shows the expected closing costs within three days of submitting a loan application, which can provide a better idea of what the closing costs for a specific transaction will be.