What are closing costs in a real estate transaction?

Closing costs in a real estate transaction refer to the fees incurred that are separate from the purchase price of the property. These costs can include a variety of expenses such as loan origination fees, title insurance, appraisal fees, and recording fees, among others. These charges are associated with the completion of the transaction and the transfer of ownership.

By distinguishing closing costs from the purchase price, it's clear that they represent additional financial obligations the buyer must prepare for outside of the actual cost of the home. Understanding closing costs is essential for buyers as these fees can significantly impact the total amount needed to finalize a real estate purchase.