Definition: Expenses beyond the purchase price that buyers and sellers must pay at closing, including lender fees, title insurance, and taxes.
Explanation: Closing costs typically range from 2% to 5% of the home’s purchase price and cover necessary services such as loan origination, property appraisals, attorney fees, and escrow deposits. Some sellers offer to cover a portion of closing costs to make their home more attractive to buyers. Buyers should account for these costs in their budget when planning their home purchase.
Example: A buyer purchasing a $300,000 home anticipates closing costs of approximately $9,000. These include title insurance, lender fees, and prepaid property taxes, which must be paid before taking ownership of the home.