What are closing costs, and do I pay for them?

There are two types of closing cost expenses: Non-recurring (you only pay once) and recurring (costs that repeat at certain intervals). Non-recurring costs include but are not limited to the following fees: Appraisal, credit report, points or loan origination, property inspection, title insurance and escrow, document preparation, tax service, notary, recording, courier, wire transfer and transfer stamps.

Recurring costs and pro-rations include but are not limited to the following fees:

Property hazard insurance, property tax, interest pro-ration, pro-rated first month’s payment and PMI (Private Mortgage Insurance), if applicable. Many of these costs are divided between the buyer and seller based on the custom of the county where your property is.

Your lender and Real Estate Agent/Broker will provide a “good faith estimate” of anticipated closing costs, and the actual costs will be summarized by the escrow holder in accordance with the lender’s instructions, and will be explained to you at the time of signing.