What are closing costs?

Closing costs refer to the fees incurred during the completion of a real estate transaction. These costs are essential to the process of transferring property ownership and typically include a variety of expenses such as loan origination fees, title insurance, appraisal fees, and attorney fees, among others.

Understanding these costs is crucial for buyers and sellers, as they can significantly affect the total amount of money that changes hands at closing. While these costs are often a percentage of the purchase price, they can vary based on factors like the location of the property and the specifics of the transaction. Being aware of closing costs allows parties involved to budget appropriately and ensure a smooth transaction.

Other choices relate to different aspects of real estate but do not accurately define closing costs. Payments made to the seller are part of the sale itself, property maintenance refers to ongoing costs after ownership transfer, and taxes calculated on the sale of property are specific financial obligations that may arise but do not represent the broader category of closing costs.