When you purchase real estate, there are expenses - known as closing costs - you pay to finalize the transaction, over and above the cost of the property.
In some cases, the seller may offer to pay certain closing costs to attract buyers or close the sale more quickly. Closing costs vary depending on the area where the property is located and are either prepaid or non-recurring.
Prepaid costs are expenses that recur periodically, including home insurance premiums and real estate taxes.
Non-recurring costs pay for securing a mortgage and transferring the property, and may include a filing fee to record the transfer of ownership, mortgage tax, attorneys' fees, credit check fees, title search and title insurance expenses, home inspection fees, an appraisal fee, and any points, or up-front interest charges, you have agreed to pay the lender.
The lender will give you a good faith estimate (GFE) of your closing costs before the closing date, so you'll know approximately how much money you need to have available at closing - usually 5% to 10% of your mortgage.
Many closing costs are tax deductible, so it's a good idea to consult with your tax adviser.
The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include an origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge.
- Browse Related Terms: Closing Costs, Closing Statement, Deed, Escrow, Good faith estimate, Real Estate Settlement Procedures Act (RESPA), Refund, Satisfaction of mortgage, Settlement (or Closing) Costs, Settlement agent, Title, Title Insurance, Title Search
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