What are Closing Costs?
Closing costs are the various legal and administrative costs paid at the time of purchase and sale of a home.
These costs are paid upfront at the time of closing by both the seller and buyer. The costs each party pays will vary depending on their municipality and the side of the transaction they are on.
Why is this term important?
Closing costs are an essential part of the home-buying process and are often overlooked or misunderstood by buyers.
They are important as they cover the costs associated with the transaction. These costs are necessary to ensure that the buyer is protected and that the transaction is legally binding. It’s important to take these costs into account so buyers can determine the overall cost of the home and so there are no surprises on closing day.
Here is an example:
An example of a closing cost is title insurance fees. When a buyer purchases a home, their conveyance lawyer will purchase title insurance on the buyer’s behalf. The associated fees will cover the cost of researching and verifying that the property’s title is free and clear of any liens or encumbrances.