Closing costs
Also called: settlement costs, cash to close
The lender, title, and third-party fees due at closing: separate from your down payment.
Closing costs cover the work of originating the loan and transferring title: origination and underwriting charges, appraisal, credit report, title search and title insurance, recording fees, and the settlement agent’s fee.
They are distinct from both the down payment and prepaids. Down payment is equity you are putting into the property; prepaids are your own future taxes and insurance funded in advance. All three land on the same wire, which is why the total surprises people.
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Related terms
- PrepaidsMoney collected at closing to fund your own future taxes and insurance, plus interest from closing to month end.
- Down paymentThe share of the purchase price you pay in cash, becoming your starting equity in the property.
- Earnest moneyA deposit made with an offer to show the buyer is serious, held in trust and credited toward closing.
- Closing DisclosureThe final statement of your loan terms and closing costs, provided a set number of days before closing.
- Seller concessionsMoney the seller contributes toward the buyer’s closing costs, capped by the loan program.
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