What are closing costs?

Closing costs refer to the various fees and expenses associated with finalizing a real estate transaction, typically settled during the closing process. These costs are incurred by both buyers and sellers and can include things like loan origination fees, title insurance, appraisal fees, attorney fees, and inspection costs.

The reason this choice is accurate is that closing costs are a critical part of the overall transaction and are essential to completing the purchase or sale of a property. They represent the financial obligations that arise when transferring ownership from one party to another, ensuring that both parties fulfill their financial commitments.

In contrast, the other choices address different financial aspects that do not accurately describe closing costs. The first option references deductibles for tax purposes, which are irrelevant to the transaction costs incurred during closing. The third choice describes monthly mortgage payments, which are ongoing expenses, not one-time closing costs. Lastly, the fourth option pertains solely to appraisal expenses, which are just one component that might contribute to the total closing costs but do not encompass the full scope of what closing costs entail. Thus, the understanding of closing costs as comprehensive fees paid at closing is crucial for anyone involved in a real estate transaction.