Which items are typically included in closing costs?

• A. Only the down payment.
• B. Origination charges, appraisal and credit report fees, title search and insurance, recording fees, prepaid items, and any points or credits.
• C. Only recording fees and title insurance.
• D. Only property taxes and homeowners insurance.

Answer: (B)

Closing costs are the fees you pay to obtain and finalize a mortgage, separate from the down payment. They typically include origination charges (the lender’s processing and underwriting fee), appraisal and credit report fees, title search and title insurance, recording fees, prepaid items (like funds set aside for taxes and homeowners insurance and interest from closing through the end of the month), and any points or seller/lender credits used to offset costs. The down payment, while part of the total cash you bring to close, is not considered a closing cost itself. Other options fall short because they omit many of the common closing costs or focus only on a subset of items (for example, only recording fees and title insurance, or only property taxes and homeowners insurance).