What Are Closing Costs?

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What are closing costs? Closing costs, also known as settlement costs, are expenses above and beyond the price of the property that the buyers and sellers have to pay when transferring ownership of a property. That includes a loan origination fee, the cost of the title search, notary fees, attorney’s fee, taxes and the cost of the property survey. Your total closing costs will vary depending on your location and either the lender or the real estate agent can provide estimates of closing costs on your mortgage.
When your mortgage is finalized, you as the buyer will have to pay closing costs. Most lenders will not roll the costs into the mortgage so they’re essentially “out-of-pocket” or “up-front” fees that will need to be covered. Along with the basic title, service, and lender fees, closing costs include payments in advance for such items as taxes, property insurance and interest to the end of the month. Certain closing costs, such as recording fees and taxes, title examination and credit reports may be paid by the seller or they may be shared between the borrower and the seller, depending on the terms of the sales contract. The Real Estate Settlement Procedures Act (RESPA) requires that your lender give you an information booklet and a good-faith estimate on your closing costs within three days of receiving your written loan application. RESPA also requires that at closing or shortly afterward, you must receive a uniform settlement statement (USS) which is a permanent record of all the final settlement charges. You are entitled to review the settlement statement one business day before you close on your loan.

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