Education

Closing Terminology

March 11, 2026 · 5 min read

Person signing real estate closing documents at a desk

Closing comes with its own vocabulary. Here is a plain-English guide to the terms you are most likely to see on your paperwork.

Real estate attorney and clients reviewing closing documents at a table — Understanding the terminology puts you in control at the closing table.

Appraised Value: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.
Loan Application Fee: Paid to lender at time of application; cost varies by lender.
Credit Report: A report on the past ability of a loan applicant to pay installment payments.
Point: 1% of loan amount.
Origination Fee: Fee buyer pays lender to originate new loan.
Loan Discount: Points lender charges; may be paid by either buyer or seller on conventional loans; number of points fluctuates with the mortgage money market.
Tax Certificate: Certificates issued by taxing authorities showing the current year's taxes and the last year that taxes were paid.
Lender's Title Policy: Required by lender to ensure that the lender has a valid lien; does not protect the buyer.
Owner's Title Policy: Insures clear and marketable title to the property.
Escrow Fee: Charge for processing the escrow, which includes holding funds, documents, and disbursement in accordance with written instruction from the parties.
Tax Proration: Allocation of taxes already paid by seller, or due from seller at time of closing.
Recording Fees: Charged by County Clerk to record documents in the public records.
Document Preparation: Fee charged by an attorney for preparing legal documents for a transaction.
Survey: Confirms lot size and any encroachments and easements or restriction violations.
Inspections: An examination of property for various reasons such as termite inspection; inspection to see if required repairs were made before funds are received, etc.
Commission: An amount paid to real estate broker as compensation for their services.
Private Mortgage Insurance: Insurance against a loss by a lender in the event of default by a borrower (mortgagor).
Home Owner's Insurance: Protects property and contents in case of loss.
Escrow Account or Impound Account: Funds held by lender for payment of taxes, maintenance, and insurance when due.
Maintenance Fee: Charged by homeowners' association as set out in subdivision restrictions (where applicable).
Amortization Fee: Schedule showing principal and interest payments throughout the life of the loan.
Prepayment Penalty: Charged by lender for premature payment of either all or part of the principal loan balance.