Closing costs are the fees and expenses that buyers and sellers must pay to complete a real estate transaction. These costs are paid at the 'closing' of the sale, when the property officially changes ownership.
What They Include
- Legal and administrative fees: Charges for lawyers, notaries, and paperwork.
- Appraisal fees: The cost of evaluating the property’s market value.
- Title insurance and registration: Protection against legal claims on the property and recording the change of ownership.
- Taxes: Property transfer taxes or prepaid property taxes, depending on location.
- Miscellaneous: Courier fees, survey fees, or other administrative costs.
Typical Amount
Closing costs usually range from 2% to 5% of the property’s purchase price. For example, on a $300,000 home, closing costs could be between $6,000 and $15,000.
Why They Matter
Closing costs are an important part of budgeting for a home purchase. Buyers need to prepare for these expenses in addition to the down payment, while sellers may also cover certain fees depending on the agreement.
Final Thoughts
Being aware of closing costs helps avoid surprises during the final stage of a home purchase. Planning ahead ensures that both buyers and sellers can complete the transaction smoothly.