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Understanding Closing Costs: What Factors Determine the Expenses?

Posted by Tony Senerchia Sr. | Jun 16, 2023 | 0 Comments

Closing costs are an essential part of any real estate transaction. They encompass various fees and expenses associated with finalizing the purchase or sale of a property. Understanding what factors contribute to closing costs can help buyers and sellers anticipate and plan for these expenses. In this blog post, we will explore the key determinants of closing costs and shed light on why they vary from one transaction to another.

Property Purchase Price

The purchase price of the property has a direct impact on closing costs. Generally, closing costs are calculated as a percentage of the purchase price. This means that higher-priced properties will typically incur higher closing costs, while lower-priced properties will have lower costs. Keep in mind that closing costs may also include fixed fees, regardless of the property's price.

Loan-Related Fees

If the buyer is financing the purchase with a mortgage, there will be various loan-related fees involved in the closing process. These fees can include origination fees, points, appraisal fees, credit report charges, and mortgage insurance premiums. The specific loan terms and conditions, as well as the lender's policies, will influence the total loan-related closing costs.

Title Services and Insurance

Title services and insurance are crucial components of closing costs. The title company conducts a title search, provides title insurance to protect the buyer and lender against potential title issues, and facilitates the closing process. The cost of these services depends on the property's location, the purchase price, and the complexity of the title search.

Government Taxes and Fees

Government taxes and fees are an unavoidable aspect of closing costs. These can include transfer taxes, recording fees, and property taxes. The exact amount will vary based on the location and specific regulations of the area where the property is located. It's important to consult with a local real estate professional or attorney to understand the specific taxes and fees applicable to your transaction.

Prepaid Expenses

Certain expenses need to be paid in advance or prepaid at closing. These may include property taxes, homeowners insurance premiums, and prepaid interest on the mortgage loan. The amount of prepaid expenses will depend on factors such as the time of year, the property's tax assessment, and the timing of the closing.

Inspections and Surveys

Buyers often opt for inspections and surveys to assess the property's condition and boundaries. The cost of these services is typically borne by the buyer and will contribute to the closing costs. The type and extent of inspections or surveys required can vary based on the property's characteristics and local regulations.

Attorney and Escrow Fees

If an attorney is involved in the transaction, their fees will be part of the closing costs. Attorneys provide legal guidance, review contracts, and ensure the transaction complies with applicable laws. Escrow fees, if applicable, cover the services provided by an escrow company or agent to facilitate the transfer of funds and documents during the closing process.


Closing costs are influenced by various factors and can vary significantly from one real estate transaction to another. Understanding these factors allows buyers and sellers to anticipate and plan for the associated expenses. By considering the purchase price, loan-related fees, title services, government taxes, prepaid expenses, inspections, and attorney or escrow fees, you can gain a clearer understanding of the closing costs you may encounter. Consulting with professionals, such as real estate agents, lenders, and attorneys, can provide further clarity and help you navigate the closing process smoothly.

If you are interested in learning more about working with the Dimension National Title on your real estate transaction, reach our offices today! 

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About the Author

Tony Senerchia Sr.

Anthony “Tony” Senerchia, Sr. is an accomplished attorney and entrepreneur with a career spanning over 25 years. He is licensed to practice law in multiple states and is the CEO and Founder of both Senerchia & Senerchia PC and Dimension National Title.


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