What are ‘Closing Costs’?

What are ‘Closing Costs’?

The expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit reports.  Closing costs are also known as settlement costs.  These closing costs are in addition to the down payment.

Closing costs are separated into two categories: nonrecurring closing costs and prepaid costs. Nonrecurring costs are one-time costs associated with buying a property or obtaining a loan. Prepaid costs are those that recur over time, such as property taxes and homeowners’ insurance. These costs are estimated by the lender on what is called a “good-faith estimate”, which the lender must issue to the borrower within three days of a home loan application.   If they don’t give it to you, ask for it.  Then, the day before the closing, ask your lender for the actual “Settlement Statement” (aka “the HUD” or “the HUD-1”), which is the final and complete form with all the numbers for the sale, including the actual closing costs.

  • Origination Fee
  • Discount Points
  • Credit Report
  • Loan Fee Application
  • Private Mortgage Insurance
  • Initial Interest
  • Title & Escrow Services
  • Title Insurance
  • Property Tax
  • Appraisal
  • Home Owners Insurance
  • Recording Fees