What are closing costs?

Before you buy or sell a home, it is important to prepare. Closing costs are often higher than most people expect and some people don’t expect them at all. So, what are closing costs?

Closing costs are all the fees associated with a home sale or purchase. They differ depending on the price of the home, how it is being financed, the location of the transaction, and whether you are buying or selling.

Closing costs for home buyers can include:

• Loan origination, underwriting, and processing fees

• Appraisal fees

• Home inspection fees

• Title insurance

• Escrow fees

• Property taxes

• Homeowner’s insurance

• HOA dues

• Attorney fees (in some areas)

Closing costs for home sellers can include:

• Realtor commission 

• Transfer taxes

• Title insurance

• Escrow and closing fees

• Prorated property taxes

• Prorated HOA dues

• Home warranty for buyer (optional)

• Attorney fees (in some areas)

It would be a good idea to get an estimate of your closing costs before you decide to buy or sell your home. If you are a home buyer, connect with a lender and find out how much your estimated closing costs would be for the price of the house you are searching for. If you are planning on selling, ask your Realtor what commission they charge and the other costs that would be involved. Your real estate agent should be able to provide you with a net sheet, which includes an itemized breakdown of all closing costs.