What are closing costs?

Closing costs refer to the fees and expenses that are incurred during the process of finalizing a real estate transaction. These can include various charges such as loan origination fees, title insurance, appraisal fees, credit report fees, and taxes that need to be settled before the property formally changes hands. Closing costs are essential to the transaction as they ensure that all legal and financial aspects are addressed at the closing meeting, and they can significantly affect the total amount a buyer needs to pay to finalize the purchase.

Understanding closing costs is crucial for both buyers and sellers, as these costs can add a substantial amount to the actual sale price of a property. It's important for buyers to budget for these costs in addition to the down payment, ensuring they are fully prepared for the financial responsibilities associated with acquiring real estate.