Understanding Real Estate Closing Costs

Closing costs are a crucial part of any real estate transaction, yet many buyers and sellers are surprised by the range of fees that arise just before the deal is finalized. Understanding these costs can help you budget more accurately and avoid last-minute surprises.

What Are Closing Costs?

Closing costs are the various fees and expenses required to complete a real estate transaction, over and above the property’s purchase price. Both buyers and sellers are responsible for different portions of these costs, which typically include lender fees, title insurance, appraisal fees, escrow charges, taxes, and attorney fees.

How Much Should You Expect to Pay?

For buyers, closing costs usually range from 2% to 5% of the home’s purchase price. For example, on a ₹50 lakh property, this could mean an additional ₹1–2.5 lakh in expenses. Sellers, on the other hand, can expect to pay between 5% and 10% of the sale price, with the largest portion often going toward agent commissions and transfer taxes. The exact amount varies by location, loan type, and service provider.

What’s Included in Closing Costs?

Typical closing costs for buyers include:

• Loan origination and underwriting fees

• Appraisal and inspection charges

• Title search and insurance

• Escrow or settlement fees

• Recording fees and prepaid taxes or insurance

For sellers, costs often include:

• Agent commissions

• Title transfer and recording fees

• Attorney fees

• Transfer taxes and settlement charges

How to Prepare

Request a detailed estimate from your lender or agent early in the process, and review the closing disclosure provided at least three days before your closing date. Comparing quotes from multiple service providers can also help reduce your overall costs.

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