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Closing Costs
Definition
Closing costs are fees paid at the finalization of a mortgage or loan transaction, typically 2-5% of the loan amount.
Explanation
Closing costs include appraisal fees, title insurance, attorney fees, origination fees, recording fees, prepaid taxes, and escrow deposits. These costs are paid at closing and can be rolled into the loan amount or paid separately.
Shopping for lenders and comparing Loan Estimates helps you find the best deal on closing costs, which can vary significantly between lenders.
Example
On a $300,000 mortgage with 3% closing costs, you'd pay $9,000 at closing. This includes appraisal ($500), title insurance ($1,000), and other fees.