Understanding Closing Costs
Closing costs are the fees and expenses you pay when finalizing a real estate transaction — in addition to the property's purchase price. These costs cover everything from paperwork to taxes and can vary depending on the property and the terms of the deal.
What Do Closing Costs Include?
- Lender fees — loan origination and underwriting
- Appraisal & inspection fees
- Title search & title insurance
- Recording fees — paid to the county
- Transfer taxes
- Attorney fees — if used
- Prepaid items — property taxes, homeowner's insurance, HOA dues
Who Pays What?
In Tennessee, closing costs are negotiable, but here's the general breakdown:
| Buyers typically pay | Sellers typically pay |
|---|---|
| Lender fees | Real estate agent commissions |
| Appraisal and inspection | Owner's title insurance |
| Homeowner's insurance (first year) | Transfer taxes (the “recordation tax” in TN) |
| Escrow deposits | Any agreed-upon repairs or credits |
| Title insurance (lender's policy) | Prorated property taxes or HOA dues |
| Recording fees |
Jane's tip: Always review your Closing Disclosure (CD) or Settlement Statement (ALTA) a few days before closing. It will break everything down in detail.