Closing Costs
Quick answer
Closing costs are the one-time fees paid to originate and close a loan, including origination points, appraisal, title, legal, survey, and recording fees.
Closing costs are the transaction expenses required to put a loan in place, separate from the interest paid over its life. On commercial real estate financing they commonly run 1% to 3% of the loan amount, with origination points, third-party reports, lender legal, title and escrow representing the largest line items. Escrow deposits for taxes and insurance are prepaid balances rather than costs and are excluded when calculating a refinance break-even period. Closing costs are the numerator in that calculation, which is why an otherwise attractive rate improvement can still fail to justify a refinance.
Related product: Permanent Debt
Free tool: Mortgage Refinance Calculator — run this calculation live, no sign-up required.
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