Closing Costs: What Exactly are Closing Costs

Closing costs are a number of different fees that are involved with the property taxes, insurance, and legal fees.  The day the contract becomes active and the title of the house is transferred to the buyer this is what is called the “closing”.  At this point in time before everything is said and done you will need to pay the closing costs.

These costs will pay every party that was involved with buying you your new house such as the bank for approving and providing the loan, title company for handing all the paper pushing, and local government offices for recording and transferring the deed.

Closing costs vary from region to region but no matter where you are you can plan on paying property tax.  This is a one time tax that is more times than not paid for by the buyer.  The tax owed is done with percentages and usually range from 0.5% to 3.25%.  What percentage you pay is based on the value of the property and is due when you sign the contract.

You do have an option of rolling the closing costs into the loan however this is entirely up to the bank’s willingness to lend you more money.  More times than not if you have a loan for $150,000 adding a few more thousand is not going to be a big deal.  There are other times it will be an issue and the bank will not budge on giving you another dime.  There are other ways to work with your real state agent or lender to have the seller pay them but this is in depth and you would need to be advised by a professional to understand this completely.