What are closing costs?

Closing costs refer to the various fees and expenses that must be paid at the closing of a real estate transaction. These costs are incurred by both buyers and sellers and can include a wide range of items such as loan origination fees, title insurance, appraisal fees, inspections, and attorney fees, among others.

The closing costs serve to cover the financial aspects required to finalize the purchase of a property. They are typically itemized in a document known as the closing disclosure and must be settled before the title is transferred from the seller to the buyer. Understanding closing costs is essential for buyers and sellers as these can significantly affect the overall expenses incurred during the transaction. Knowing what these costs encompass helps in better financial planning and avoiding unexpected surprises at closing.