What are closing costs?

Closing costs are fees associated with finalizing a real estate transaction. These costs cover a variety of services that are required to complete the purchasing process, such as title searches, appraisals, attorney fees, and various administrative charges. They are typically paid at the closing of the transaction, which is when the title of the property is officially transferred from the seller to the buyer.

Understanding closing costs is essential for anyone involved in real estate, as they can significantly impact the overall amount needed to finalize a purchase. Buyers should be aware of these costs and budget for them, as they can amount to a significant percentage of the property’s purchase price.

The other options focus on specific types of costs or fees, which do not encompass the full range of expenses associated with closing a real estate transaction. For instance, costs incurred during property inspections might be a part of the overall expenses but are not synonymous with closing costs. Similarly, fees included in the mortgage payment generally refer to ongoing costs rather than one-time closing fees. Taxes applied to the sale of a property may also be part of closing costs in some regions, but they are not the complete definition, as they do not cover all closing expenses.