What do estimated closing fees generally represent?

Estimated closing fees generally represent the various costs associated with finalizing a mortgage loan and the transfer of property ownership at closing. These fees typically average between 2% and 5% of the loan amount, which encompasses a range of expenses, including lender charges, title insurance, escrow fees, and other third-party fees necessary to facilitate the closing process. This range is significant for buyers and sellers to understand, as it helps them prepare for the financial aspects of closing.

The first option discusses monthly mortgage payment estimates, which are separate from the one-time costs incurred at closing. The third option pertains specifically to appraisal fees, which are just one component of the overall closing costs, not the total representation of estimated closing fees. Finally, the fourth option about deposits for insurance policies does not capture the comprehensive nature of closing fees, which are more varied and can include many different types of charges.