Real Estate Glossary > C > Closing Costs Definition

Fees incurred in addition to the purchase price of a home. The fees include excise tax A tax on the transfer of ownership from the seller to the buyer paid at closing. , loan-processing costs All of the costs associated with getting a mortgage loan that lenders and brokers will include in their Good Faith Estimates. and title insurance Title insurance protects against losses resulting from problems with the title. The sellers pay for the buyer's policy, and the buyer pays for his lender's policy to ensure that the lender gets clear access to the title. that buyers and sellers pay at closing. Buyers and sellers can sometimes negotiate over who pays which fees. Typically, closing costs will amount to 2 – 5% of the purchase price. For example, if the purchase price of a home is $350,000 then closing costs could range from $7,000 – 17,500. The buyer's down payment for the home must also be paid at closing, but is listed separately from the closing costs.

Closing cost amounts vary depending on the buyer's loan program. The Good Faith Estimate An estimate of a loan's total costs, including interest, principal, mortgage insurance and fees, which lenders are required to provide borrowers within three business days after a borrower submits a loan application. provided by a lender is a fair estimate of the closing costs associated with the loan, but the final HUD-1 settlement statement The official settlement document for the purchase and sale of real estate that lists all the costs of the transaction for both the buyer and the seller. received a few days before closing most accurately totals all the closing costs paid by both the buyer and the seller. Get a list of all the closing costs in your state.