What is one primary function of closing costs?

One primary function of closing costs is to cover the fees necessary for the execution of a real estate transaction. These costs include various charges that are incurred during the closing process, such as title insurance, escrow fees, appraisal fees, and attorney fees. These fees ensure that all aspects of the transaction are legally and appropriately managed, allowing for a smooth transfer of ownership from the seller to the buyer.

Closing costs play a vital role in finalizing the sale, as they ensure that all parties involved have complied with regulatory requirements and contractual obligations. This financial framework is essential to complete the transfer of property and finalize financing arrangements. Understanding closing costs is crucial for anyone involved in real estate, as they can significantly affect the overall cost of purchasing a home or investment property.