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Common Closing Cost Categories

Buying or selling a home involves more than just the price you see on the contract. At the end of the transaction comes a critical step: closing. And with it, a variety of fees and expenses known as closing costs. Understanding what these costs include helps you prepare financially and avoid surprises on closing day.


Here’s a breakdown of the most common closing cost categories and what they cover.


1. Loan-Related Fees

If you’re financing your home purchase, you’ll likely pay several lender fees, such as:

  • Loan origination fee: Charged by the lender for processing and underwriting your loan.

  • Application fee: Covers the initial cost of processing your mortgage application.

  • Credit report fee: The cost of pulling your credit report to determine loan eligibility.


2. Appraisal and Inspection Fees

Before a lender approves your loan, they’ll want to ensure the property’s value supports the loan amount.

  • Appraisal fee: Pays for a licensed appraiser to evaluate the home’s fair market value.

  • Home inspection fee: Covers the cost of checking the property’s condition, safety, and structural integrity.


3. Title and Escrow Fees

These fees protect both the buyer and lender from potential ownership disputes or title issues.

  • Title search fee: Ensures there are no outstanding liens or claims on the property.

  • Title insurance: Protects against future title disputes or errors.

  • Escrow fee: Paid to the escrow company handling the transaction, ensuring funds are transferred properly.


4. Prepaid Expenses

Some costs are paid upfront at closing to cover future payments. These may include:

  • Property taxes: Often collected in advance for a portion of the year.

  • Homeowners insurance: Typically paid for the first year at closing.

  • Interest: Covers the interest that accrues between the closing date and the first mortgage payment.


5. Recording and Transfer Fees

Local governments charge fees to record the change in ownership and process the transaction.

  • Recording fee: Paid to the county for officially recording the new deed.

  • Transfer taxes: State or local taxes on the transfer of property ownership.


Final Thoughts

Closing costs typically range between 2% and 5% of the home’s purchase price. While these fees may seem overwhelming at first, being aware of them helps you plan your budget and approach closing day with confidence.


Whether you’re buying or selling, I’ll help you understand what to expect and ensure your closing process goes as smoothly as possible. 🏡


Your NorCal Realtor

M&M Real Estate

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Cell: Call/Text 707-330-2324


About Scott Sweeney


SweeneySells

Full Time Realtor 13 Years +

Over 100 Families Served

Top 5% Producing Agent

Buying & Listing Specialist

Contract & Negotiation Ninja

CSUS Business & Marketing Graduate 2006


With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.


Reach out to SweeneySells today, and take the first step towards your real estate goals!

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