What is Closing Costs?
Closing costs are the fees paid at the closing table to complete a real estate transaction — title insurance, lender fees, recording fees, transfer taxes, prepaid escrows, and attorney fees. Typically 2-4% of purchase price for buyers, 1-3% for sellers.
Buyer closing costs typically include: lender origination fees, appraisal, credit report, title search and insurance, recording fees, transfer taxes, attorney fees (in attorney states), prepaid property taxes, prepaid homeowners insurance, prepaid mortgage interest, and the first year of HOA dues if applicable.
Seller closing costs typically include: real estate commission (5-6% of price), title insurance for the buyer in some states, transfer taxes, recording fees, attorney fees, and any concessions negotiated with the buyer.
Underwrite closing costs at 3% of purchase price for buyers as a starting point. Adjust up in high-transfer-tax markets (Pennsylvania, Maryland, New York) and down in lower-cost markets (Texas, Florida).
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