In the mortgage business, “closing” refers to the moment at which a property’s title passes hands — the moment at which the buyer officially gains a home. Closing costs are, then, the fees that accompany this process.

Closing costs will cover application and underwriting fees for lenders, attorney fees, survey fees, the costs of an appraisal (where relevant), a home inspection, and transfer fees for home owners associations. Flood, pest, and recording fees are part of the closing costs as well. The closing costs will also include property taxes and insurance — often home owners’ insurance, mortgage insurance, and title insurance. The details will vary from state to state, as well as from one situation to the next.

The closing fee or escrow fee is, of course, another essential part of closing costs. These are the fees paid to the independent third-party (escrow agent) who will oversee your closing process. This will often be an attorney.

While total closing costs will depend on many factors, they are likely to amount to between two and five percent of a property’s price. Some fees are avoidable, but because they will serve the buyer’s financial security, you are advised to consult an attorney if you have questions.