Be aware that closing costs will vary depending on the kind of loan you are getting.  For example a V.A Loan and F.H.A. loans require the seller to pay some of the closing costs and in some cases to help the buyer purchase the home, the seller may agree to pay some of the closing costs.

Common Expenses

     Title insurance policy - the lender wants to make sure the loan is safe from past claims.  Costs vary, but say at least $350.00 for a $200,000 home.

     Home Owners' Insurance - You will have to finish proof that the home is under policy.

     Lender fees are commonly incurred.  Many examples are "Document prep fee, Loan Origination fee, Courier Fees," etc.

     Points may be charged if you are trying to lower the interest rate of the loan.

     Taxes are generally paid in arears which means that this years taxes are due at the end of the year.  If you are buying during the years the previous owner will pay the taxes for the portion of the year they have lived there and it should appear as a credit on your settlement statement.

     The first months mortgage payment is usually paid at closing or at least a portion of a months payment is made if you are not closing at the end of the month.  One thing to remember is that your mortgage is paid in arrears.  For example:the payment due the first of Sept. is actually paying for August.

Nice To Know Facts

1.  If you are unable to purchase a home with at least a 20% down payment you will probably be asked to pay Private Mortgage Insurance often referred to as PMI .  The cost is usually 1/2 to 3/4 of a % of the loan amount for a year.  To find out how much you are paying monthly you divide by 12.  REMEMBER THIS as soon as you have paid down to 80% of the appraised value or  the home has risen in value due to appreciation to 80% of the value you will be required to pay PMI.  When you reach that 80% ask the lender to remove the PMI otherwise the insurance company will continue to bill for the life of the loan.

2.  Prior to closing, you will probably be asked to pay for an appraisal fee and a credit report, normally this is less than $400.00.

3.  You have the right to have the home inspected.  Normally this is done on resale homes only, but can also be done on new construction.  A professional inspector can often discover hidden problems and is a way to be aware of future problems.  If problems are disclosed the cost or repairs may be a negotiation factor in the purchase price.  Expect to pay from $200 to $500