Closing costs are fees incurred prior to and during closing. This is the time when title to the property legally changes hands from the seller to the borrower. Typical fees incurred include attorney fees, title service fees, recording fees, transaction taxes, appraisal fees, and pre-paid insurance and taxes. The amount of closing fees depends on a number of factors, such as purchase price and loan terms. Although closing costs vary from place to place, on average, they amount to 2-3% of the purchase price of the home.  (For information about closing on land, click here.)