What does "closing costs" typically include?

Closing costs typically encompass a variety of expenses that are incurred during the finalization of a real estate transaction. This includes fees related to the purchase or sale of a property such as loan origination fees, title insurance, appraisal fees, inspection fees, attorney fees, recording fees, and any applicable taxes. These costs are essential for the completion of the sale and ensure that all legal and financial aspects of the transaction are properly handled.

While options like the real estate agent's commission and property taxes may be part of broader transaction costs, they are not the entirety of closing costs. Discounts on mortgage rates pertain to financing terms rather than direct costs incurred at closing, thereby making them unrelated to the core definition of closing costs. Through this perspective, it's clear that understanding the full spectrum of expenses categorized as closing costs is crucial for buyers and sellers in a real estate transaction.