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Real Estate Closing Costs Explained

By: Elite Legacy Education, November 3, 2017

According to Realtor.com, “Home buyers pay the majority of closing costs since many of these fees are associated with the mortgage.” Regardless of which side you’re on – either buying or selling – you’ll surely want to know how much closing costs are.


What are closing costs?

Closing costs refer to all of the expenses that must be paid by the buyer and seller of a home in order to complete the transaction. These costs typically refer to administrative work required to process the mortgage, as well as commissions for the real estate agents. Don’t be fooled by this oversimplification. As you’ll see next, there are many fees that really start to add up.


How much are closing costs for the buyer?

Since various fees can differ from state to state, let’s focus on the different expenses buyers need to cover, rather than a specific dollar amount.


  • Loan origination fee – for processing your loan paperwork
  • Credit check fee – for checking your credit history and score
  • Loan underwriter fee – for assessing your credit worthiness
  • Property appraisal fee – to ensure property value matches your desired loan size
  • Home inspection fee – to ensure the property is as listed
  • Title search fee – to ensure no outstanding property liens exist
  • Survey fee – for single-family homes and townhomes only
  • Stamp taxes – on any money borrowed for your loan


As you can see there are several sources of additional expenses when it comes to closing a real estate deal – especially for the buyer. All of these added fees are required to ensure that everything is in order with the mortgage, property and the overall deal.


How much are closing costs for the seller?

After the extensive list above, it may seem that sellers don’t have to cover as many expenses as buyers:


  • Closing fee – to the title company or real estate attorney
  • Taxes on sale of home – standard for all sales
  • Attorney fee (if you have one as the seller)
  • Title transfer fee – to transfer ownership to the buyer


While it may seem like buyers have to pay for a lot more when it comes to closing costs, this is not necessarily true. You see, the seller of the home generally covers the real estate agent commissions – yes, the selling and buying agent. It generally ends up in the 4-7% range of the total property value. This helps to balance out the distribution of closing costs between both parties involved.


Concluding on closing costs

While there are a number of different factors to consider, it can be tough to come up with an exact estimate of the closing costs. For help with this, you can use an online calculator to help you calculate your estimated closing costs.


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