Real Estate Glossary > C > Closing Costs Definition

Fees incurred in addition to the purchase price of a home. The fees include excise tax, loan-processing costs and title insurance 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 provided by a lender is a fair estimate of the closing costs associated with the loan, but the final HUD-1 settlement statement 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.