What are closing costs?

Closing costs refer to the various fees and expenses that must be paid in order to finalize a property transaction. These costs are incurred during the transfer of ownership from the seller to the buyer and can encompass a wide range of charges, including title insurance, appraisal fees, attorney fees, and recording fees, among others.

Understanding closing costs is crucial for both buyers and sellers, as they represent a significant part of the financial transaction in real estate. Buyers need to budget for these expenses in addition to the down payment, while sellers can expect to pay certain closing costs related to the sale process.

In this context, distinguishing closing costs from other options is key: the principal amount of the loan pertains specifically to the borrowed funds; costs associated with real estate repairs relate to maintenance or improvement expenses unrelated to the closing process; and monthly mortgage payment amounts refer to regular payments made to repay the loan, rather than one-time costs associated with transferring ownership.