Which item is typically a buyer closing cost?

Which item is typically a buyer closing cost?

• A. Seller's commissions
• B. Loan costs
• C. Transfer taxes
• D. Recording fees

Answer: (B)

Loan costs are charges the lender imposes to set up and fund the mortgage—origination fees, discount points, credit reports, appraisal, underwriting, and similar lender-specific fees. These costs arise from obtaining financing, so the buyer, as the borrower, typically pays them at closing. In contrast, seller’s commissions go to the seller’s agent, transfer taxes are taxes on the property transfer (often paid by the seller depending on local rules), and recording fees cover officially recording documents (who pays can vary by jurisdiction). So the item that most clearly represents a buyer closing cost is the loan costs.

Loan costs are charges the lender imposes to set up and fund the mortgage—origination fees, discount points, credit reports, appraisal, underwriting, and similar lender-specific fees. These costs arise from obtaining financing, so the buyer, as the borrower, typically pays them at closing.

In contrast, seller’s commissions go to the seller’s agent, transfer taxes are taxes on the property transfer (often paid by the seller depending on local rules), and recording fees cover officially recording documents (who pays can vary by jurisdiction). So the item that most clearly represents a buyer closing cost is the loan costs.