Closing Costs
Fees and expenses paid at the close of a real estate transaction, beyond the property price and down payment.
What is Closing Costs?
Closing costs are the fees and expenses that buyers and sellers pay to finalize a real estate transaction, separate from the home's purchase price and down payment. For buyers, these typically include loan origination fees, appraisal fees, title insurance, title search, attorney fees, prepaid taxes and insurance, and government recording fees. Closing costs for buyers typically range from 2% to 5% of the loan amount. Sellers generally pay real estate agent commissions (typically 2.5–3% per agent) plus transfer taxes. The CFPB requires lenders to provide a Loan Estimate within three business days of application and a Closing Disclosure three days before closing.
Example
A buyer purchasing a $450,000 home with a $90,000 down payment (20%) borrows $360,000. Estimated closing costs at 3%: $10,800. Itemized: loan origination $3,600, appraisal $600, title insurance $1,200, title search $400, prepaid insurance $1,500, prepaid property taxes $2,500, recording fees $200, other $800. Total cash needed at closing: $90,000 + $10,800 = $100,800.
Source: Consumer Financial Protection Bureau — Closing Costs