Super Noob Question - Closing Costs

[Gregory Butterfield]

Hi BP!

I am having trouble finding a good explanation of what constitutes closing costs. What factors effect the amount of the closing costs? Is it based on the sales price of the property or the amount of the loan? Is it included in the loan or paid out of pocket? Who receives the closing costs? Banks? The seller? My Uncle Jerry?!?

Please break it down like I'm 5 years old and help me become smarter on closing costs, I believe in you BP!

[David Hines]

Justin Johnson The tax credit your realtor mentioned is probably tax proration for the year. Since property taxes are paid at the end of the year, the seller owes you a prorated amount from January 1, 2017 until the closing date. This will typically be held in an escrow account by your lender to pay property taxes at the end of the year.