Closing Costs — Financial Glossary
Definition: Fees and expenses paid at the closing of a real estate transaction, typically 2–5% of the loan amount.
What are closing costs?
Closing costs are the fees and expenses you pay when finalizing a mortgage, beyond the down payment. They typically range from 2% to 5% of the loan amount.
Common closing costs
- Origination fee: Charged by the lender for processing the loan
- Appraisal fee: Pays for a professional home appraisal
- Title insurance: Protects against ownership disputes
- Attorney fees: Legal review of documents
- Prepaid taxes and insurance: Escrow deposits
On a $240,000 loan, closing costs could range from $4,800 to $12,000.