What is typically included in closing costs for a mortgage?

Closing costs for a mortgage encompass a variety of fees and expenses incurred during the finalization of a home purchase or mortgage loan. One key component of these costs is title insurance. Title insurance protects both the lender and the homeowner from potential issues related to the property's title, such as undisclosed liens or ownership claims that might arise after the purchase is completed. By including title insurance as part of closing costs, it ensures that the buyer has assurance regarding the ownership of the property.

In contrast, home maintenance costs are typically ongoing expenses that homeowners will face after the purchase is completed and are not part of the closing costs. Real estate commissions are usually paid by the seller of the property and, although they can be a sizable cost in a real estate transaction, they are not directly considered closing costs for the buyer or the mortgage itself. Appraisal fees, while they are often associated with obtaining a mortgage, are generally categorized separately from closing costs even though they may be required as part of the loan process. Thus, title insurance stands out as a standard inclusion in the breakdown of closing costs necessary for finalizing a mortgage transaction.