Closing Costs

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Term Definition
Closing Costs

Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items that recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate, which they must issue to the borrower within three days of receiving a home loan application. Realtors should always be able to provide their customer or client with a reasonably accurate (as opposed to a lender's good faith estimate) closing cost estimate at any time.

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