Closing costs are the fees and expenses that buyers and sellers incur when finalizing a real estate transaction. These costs can include items such as loan origination fees, title insurance, appraisal fees, and property taxes. Typically, closing costs range from 2% to 5% of the home's purchase price and are paid at the closing meeting, where ownership is officially transferred. Both buyers and sellers may be responsible for different closing costs. Buyers usually pay for inspections and escrow fees, while sellers might cover real estate agent commissions and transfer taxes. Understanding these costs is essential for budgeting and ensuring a smooth transaction.