What might be included in closing costs?

Closing costs are the fees and expenses that are incurred during the finalization of a real estate transaction, usually at the closing meeting where property ownership is transferred from the seller to the buyer. One common component of closing costs is agent commission fees, which are paid to the real estate agents involved in the transaction. These fees are typically a percentage of the sale price of the property and can be among the most significant costs associated with closing.

While homeowner's insurance premiums relate to ongoing costs of property ownership, they are not classified as closing costs because they are usually paid separately and are not directly linked to the transaction's closing process. Similarly, costs for property renovations are considered improvements made to the home, which do not directly factor into the closing costs. Lastly, monthly mortgage payments arise after the close of escrow and do not pertain to the costs incurred at the closing itself. Therefore, agent commission fees are a crucial aspect of what makes up closing costs in real estate transactions.