Closing costs are additional fees incurred at the end of the home buying process, specifically during the transaction when the property title is transferred from seller to buyer. These costs typically range from 2% to 6% of the home’s purchase price and vary based on national, state, and local tax rates.
Closing costs cover various services and expenses associated with the transaction, including:
- Real Estate Agent Fees: Compensation for the agents involved in the sale.
- Loan Origination Fees: Charges from the lender for processing the mortgage, usually about 1% of the loan amount.
- Survey Fees: Costs for verifying property boundaries.
- Property Appraisal Fees: Fees for assessing the property’s value.
- Home Inspection Fees: Costs for checking the home’s condition.
- Credit Report Fees: Charges for obtaining your credit history.
- Title Search Fees: Costs for confirming the property’s ownership history.
- Escrow Deposit: Funds held in escrow until the transaction closes.
- Attorney Fees: Legal costs associated with the transaction.
- Private Mortgage Insurance (PMI): Required if your down payment is less than 20%.
- Loan Taxes: Taxes assessed on the loan amount.
- Document Recording Fees: Costs for filing legal documents with local authorities.
- Mortgage Points: Fees paid to lower the interest rate on the mortgage.
