Closing Costs

What Does Closing Costs Mean?

Closing costs are the expenses that a buyer must pay in addition to the property’s purchase price when buying real estate.

Insuranceopedia Explains Closing Costs

When purchasing real estate, the transaction is not complete once the selling price is paid. The buyer must also cover several additional costs, which can add up. For instance, the buyer is responsible for paying for a property survey and an appraisal to ensure the selling price aligns with its market value. Additionally, legal fees are required for lawyers who draft the purchase contract and facilitate the title transfer.

Buyers also typically prepay the first year of homeowners insurance, which most lenders require before funding the loan. The premium gets rolled into the total owed at closing, and the average cost of homeowners insurance varies widely by state.