Closing costs are fees associated with the purchase or refinance of a property that are paid at the closing of a real estate transaction. These costs can include a variety of fees charged by lenders, title companies, attorneys, and government agencies.
Here are some common closing costs you should know about:
- Origination fee: This is a fee charged by the lender for processing the loan application.
- Appraisal fee: This fee covers the cost of determining the value of the property.
- Title search and title insurance: This fee covers the cost of searching public records to ensure that the seller is the rightful owner of the property and that there are no liens or other claims on the property. Title insurance protects the buyer against title-related issues that may arise in the future.
- Survey fee: This fee covers the cost of having the property surveyed to confirm its boundaries.
- Recording fee: This fee covers the cost of recording the transfer of ownership with the local government.
- Underwriting fee: This fee covers the cost of the lender's underwriters reviewing the loan application and determining the borrower's creditworthiness.
- Attorney fee: This fee covers the cost of an attorney reviewing and preparing the closing documents.
- Tax and transfer fee: This fee covers the cost of transferring ownership of the property and paying any taxes that may be due.
It's important to note that closing costs can vary widely depending on the lender, the location of the property, and other factors. To get an estimate of the closing costs for a specific transaction, you can ask the lender for a Good Faith Estimate or a Loan Estimate.