What Are Closing Costs?

We in the real estate business tend to throw around a lot of terms that we some times just assume that our clients and customers understand. One of these is “closing costs.”

Especially in the case of first-time buyers, not all buyers understand exactly what we mean when we talk about closing costs.

Closing costs are the expenses that a buyer (and there are some for sellers, too) will encounter as a result of closing the transaction with a title company, in addition to the expenses resulting from a particular loan. With regards to the closing itself, the title company where you close will charge for the closing itself and the title insurance policy that protects you in case someone came back later with a claim on the title. There may be some additional closing costs from the title company for recording and other fees.

The closing costs associated with the loan can range anywhere from origination and document fees, to the standard charges for the credit report and appraisal. This amount really depends on the loan program that you use. Conventional loans tend to have less in closing costs than government loans like FHA or VA.

The bottom line is that there will be extra charges to cover in addition to the downpayment. In the next post, we’ll talk about the option of having the seller pay closing costs on behalf of the buyer.

For more information on closing costs or other issues concerning purchasing your first home, see our website at www.springfieldfirsthome.com or give us a call or text anytime at 417.872.9222.