What are "closing costs" in real estate transactions?

Closing costs refer specifically to the various fees and expenses that are incurred during the final stages of a real estate transaction, which are necessary to facilitate the transfer of ownership. These costs are separate from the actual purchase price of the property and can include a variety of items such as mortgage origination fees, title insurance, appraisal fees, inspection fees, and attorney fees.

Understanding closing costs is crucial for both buyers and sellers, as they can significantly impact the overall financial outlay for a property transaction. Recognizing these costs ensures that buyers can adequately budget for the complete financial commitment of purchasing a home, beyond just the listed purchase price.

The other options do not accurately define closing costs. Costs associated with buying furniture are related to personal property and not part of the transaction's closing expenses. Renovation expenses occur after the acquisition of the property and are not part of the transaction's closing phase. Deposits for rental properties are entirely separate from the process of buying real estate and do not pertain to closing costs in a sale context.