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What Are Closing Costs?

Closing or settlement costs are an accumulation of charges paid to multiple entities for the professional services associated with buying real property.

Here is a quick guide on who pays what at the close of escrow:

What Sellers can generally expect to pay for:

  • Owner’s Title Insurance Policy premium
  • Real Estate Commission
  • One-half of the escrow fee (charges for services/documents by escrow to transfer title)
  • Any loan charges required by Buyer’s lender specified in contract
  • Pay off charges plus any fees, penalties and interest on loans made by the seller
  • Repair work specified by purchase contract
  • Encumbrances of record against the Seller
  • Prorated property taxes and or delinquent taxes to date of close
  • Unpaid HOA dues or assessments of record
  • HOA transfer fee
  • HOA Disclosure Statement

What Buyers can generally expect to pay for:

  • Lender’s Title Policy (insures new lender’s lien position)
  • One-half of the escrow fee
  • All new lender charges (document preparation, appraisal, loan origination, credit report, points, underwriting fee, etc.)
  • Recording fees for all buyer documents
  • Prepaid interest on the new loan
  • Hazard Insurance premium and impounds


Source: First Arizona Title Agency – Home Buying Guide

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