What are "closing costs"?

Closing costs refer to the various fees and expenses that are incurred during the process of closing a real estate transaction. These costs can include title insurance, appraisal fees, attorney fees, inspection fees, and other necessary expenses that facilitate the transfer of property ownership. Closing costs are typically outlined in the closing disclosure and can be paid by the buyer, seller, or both, depending on the agreement made in the purchase contract. Understanding closing costs is critical for both buyers and sellers as these expenses can significantly impact the overall financial outcome of a real estate transaction.