Closing costs refer to the fees and expenses associated with the finalization of a real estate transaction, typically when buying or refinancing a property. These costs are paid at the closing, which is the final step in the real estate transaction where ownership of the property is transferred from the seller to the buyer.

Closing costs can vary widely depending on factors such as the location of the property, the purchase price, and the terms of the mortgage. Common closing costs may include:

1. Loan Origination Fee: This fee covers the cost of processing the loan and is usually a percentage of the loan amount.

2. Appraisal Fee: The cost of having a professional appraiser assess the value of the property.

3. Title Search and Title Insurance: Fees associated with ensuring that the property has a clear title and obtaining title insurance to protect against any title defects.

4. Attorney Fees: Legal fees for services provided by an attorney, if one is involved in the transaction.

5. Home Inspection Fees: The cost of a home inspection to assess the condition of the property.

6. Survey Fee: The expense of having a professional survey the property to determine its boundaries.

7. Recording Fees: Charges for recording the new deed and other legal documents with the appropriate government authorities.

8. Escrow Account: Setting up an escrow account to cover property taxes and homeowners insurance.

9. Courier Fees: Charges for transporting documents between parties involved in the transaction.

10. Prepaid Interest: Interest that accrues between the closing date and the end of the month.

It's important for homebuyers to be aware of closing costs and budget for them in addition to the down payment. In some cases, sellers may also contribute to or cover certain closing costs as part of the negotiation process. Lenders are required to provide a Loan Estimate and a Closing Disclosure that outline the estimated and actual closing costs, respectively, to help buyers understand and prepare for these expenses.