Closing Costs

Financial Dictionary -> Mortgages -> Closing Costs

Closing costs is the blanket term that refers to all the fees and costs associated with a loan or transaction, which occur when the sale takes place. It is more commonly used in the real estate industry in regards to appraisal fees, insurance, attorney fees, deed fees etc. When the contract is executed it is called the closing period, and this is where the term originates from. All fees are paid during this period.
During the closing period, the following closing costs outlined below are usually paid if warranted:

- Attorney Fees To ensure the various documents are handled correctly both parties require a lawyer. Most commercial lenders require you to use a lawyer.
- Title Services There are various costs associated with the title of the property, including the search and insurance. Usually the seller pays the majority.
- Recording Fees These are required by the government in order to record the deed and enter an official record noting that the title of the property has changed hands.
- Taxes Required by law, this might include documents and transaction stamps.
- Survey Fee A surveyor is often hired to professionally confirm the size, dimensions and health of the property and land in question.
- Brokerage Commission This is paid to the broker who may have helped to promote, market and sell the property on behalf of the seller. The buyer may also have used a broker to find a property.
- Mortgage Fees Costs associated with the processing of the loan application.
- Points Sometimes points are paid by the borrower of the mortgage to ensure a lower rate of interest.
- Appraisal Fees This fee is paid by the buyer or sometimes the seller to confirm the value of the property.

There may also be various other costs associated with inspection of the property or on interest rates and mortgage deals.