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Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
Definition
Closing costs are the combined fees required to finalize a real estate purchase or refinance, typically ranging from 2% to 5% of the loan amount. They include appraisal fees, title insurance, attorney fees, recording fees, origination charges, prepaid interest, and escrow deposits for taxes and insurance. Some costs are negotiable, and certain fees can be covered by lender credits if you accept a higher interest rate. Closing costs are itemized on the Closing Disclosure form, which borrowers receive at least three business days before closing. Understanding each line item helps investors budget accurately and compare loan offers.
How This Relates to DSCR Loans
DSCR loan closing costs may be slightly higher than conventional loans due to additional underwriting and Non-QM fees. Factor these into your total cost of capital when analyzing deals.
Related Terms
Origination Fee
A fee charged by a lender or broker for processing and underwriting a new loan.
Title Insurance
Insurance that protects the buyer and lender against claims on a property's ownership history.
Escrow
An account held by a third party to collect funds for taxes, insurance, or closing costs.
Points (Discount Points)
Upfront fees paid to the lender to reduce the interest rate, where one point equals 1% of the loan amount.
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