Why Does Closing Cost So Much?
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Closing is expensive for several reasons.
First, state transfer taxes are typically based on the sale price of the property or the amount of mortgage debt. These tend to be very large sums, so even a small percentage can be a lot of money.
Second, payment for many services occurs at closing — title insurance, legal services, appraisals, etc.
Third, some closing costs are pre-payments, money collected in advance.
Fourth, in addition to transfer costs, there are also loan expenses paid at closing. For instance, points are paid at settlement.
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