What are closing costs?

Closing costs refer to the various fees and expenses that are incurred when finalizing a real estate transaction. These costs can encompass a range of items, including but not limited to title insurance, appraisal fees, attorney fees, inspection fees, and recording fees. They are typically calculated as a percentage of the purchase price and can significantly impact the total amount required from the buyer at the closing table. Understanding closing costs is crucial for both buyers and sellers, as they represent the financial obligations associated with completing the purchase or sale of a property, and knowing them helps in better financial planning and decision-making.

In contrast, the other options focus on different aspects of real estate transactions. The total price paid by a buyer for a property encompasses the sale price itself but does not detail the additional expenses associated with closing the transaction. Costs incurred for property maintenance occur post-purchase and are unrelated to the closing process. Lastly, taxes paid annually by homeowners pertain to the ongoing financial responsibilities of owning property rather than the one-time fees assessed during the closing stage.