Closing Costs


DEFINITION of 'Closing Costs'

The expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

Also known as "settlement costs."


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BREAKING DOWN 'Closing Costs'

Closing costs are separated into two categories: nonrecurring closing costs and prepaid costs. Nonrecurring costs are one-time costs associated with buying a property or obtaining a loan. Prepaid costs are those that recur over time, such as property taxes and homeowners' insurance. These costs are estimated by the lender on what is called a "good-faith estimate", which the lender must issue to the borrower within three days of a home loan application.

  1. Dry Closing

    A type of real estate closing in which the entire closing requirements ...
  2. Tax Service Fee

    A legitimate closing cost used to ensure that mortgagors pay ...
  3. Origination Points

    A type of fee borrowers pay to lenders or loan officers in order ...
  4. Good Faith Estimate

    An estimate of the fees due at closing for a mortgage loan that ...
  5. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  6. Down Payment

    A type of payment made in cash during the onset of the purchase ...
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  1. Do FHA loans have closing costs?

    Because Federal Housing Administration (FHA) loans are provided by financial institutions, taking out an FHA loan entails ... Read Full Answer >>
  2. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  3. Does an FHA loan require a down payment?

    Federal Housing Administration (FHA) loans require down payments, which can be as low as 3.5% of the total purchase price ... Read Full Answer >>
  4. Can a 401(k) be used for a house down payment?

    A 401(k) retirement plan can be tapped to raise a down payment for a house. You can either borrow money or make a withdrawal ... Read Full Answer >>
  5. Do banks offer FHA loans?

    Many major U.S. banks, including Well Fargo & Company, U.S. Bancorp, Bank of America and Flagstar Bancorp, offer Federal ... Read Full Answer >>
  6. Does the FHA provide construction loans?

    The Federal Housing Administration (FHA) does provide construction loans for both new construction and rehab projects. The ... Read Full Answer >>

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