Closing Costs
Definition
The fees and expenses paid to finalize a real estate transaction beyond the down payment. Typically 2-5% of the home price. Includes title insurance, appraisal, inspection, attorney fees, and lender fees. The seller might pay some or all of these.
Why It Matters
Closing costs are often overlooked when budgeting for a home. A $300,000 home could have $9,000 in closing costs. Understanding what's negotiable (inspection, appraisal) vs fixed (title insurance) helps you budget properly.
Example
Buying a $400,000 home with 3% closing costs equals $12,000 due at closing. Seller pays half equals you pay $6,000. Bank charges 1% origination fee equals $4,000. Getting quotes from multiple lenders can save $2,000+ easily.