Closing costs include but are not limited to fees for appraisal, credit report, tax service, processing, underwriting, document preparation, flood certificate, funding, title insurance, title closing, recording, attorney and transfer tax.
You usually pay them at the time that you close on your mortgage. Most of the time, the home buyer who pays them. Sometimes with loans such as VA loans, the seller pays some of the closing costs.
What if you can’t afford closing costs?
You can avoid upfront closing costs by getting a no-closing cost mortgage. You don’t pay them when you close on the mortgage. A lender may charge a higher interest rate on the loan for not paying closing costs, or the lender may wrap the costs into the total mortgage owed. You still will have to pay the closing costs, but you don’t have to come up with the funds up front.
Finally, home buyers can negotiate with the seller over who pays these closing costs. Sometimes the seller will agree to assume the buyer’s costs.