John Creighton

Sam

Many of your answers depend on the specific property, what type of loan you are obtaining and what amount of money you have to put down on a home. Below is a list of typical costs associated with purchasing a home. These upfront costs typically run in the 3% to 3.5% of the purchase price amount. In today's environment most loans are going to require at least 3.5% downpayment based on the purchase price. If you put down less then 20% of the purchase price then in addition to your monthly principal and interest on the loan you will also be required to pay mortgage insurance.

Most lenders will also require that on a monthly basis you pay 1/12 of the annual taxes and home owners insurance into an escrow account that they will then use to pay the taxes and insurance when due. So on a monthly basis your payment will include the followin

Principal Amount
Interest
1/12 of taxes
1/12 of insurance
mortgage insurance (if required)

Common Closing Costs for Buyers

The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check. The title company or other entity conducting the closing will tell you the required amount for:

• Downpayment.
• Loan origination fees.
• Points, or loan discount fees you pay to receive a lower interest rate.
• Appraisal fee.
• Credit report.
• Private mortgage insurance premium.
• Insurance escrow for homeowners insurance, if being paid as part of the mortgage.
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording fees.
• Title insurance policy premiums.
• Survey.
• Inspection fees—building inspection, termites, etc.
• Notary fees.
• Prorations for your share of costs such as property taxes.

A Note About Prorations. Because such costs are usually paid on either a monthly or a yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, property taxes are due in April for the first 6 months of the year and in October for the second 6 months of the year. Assume you purchase a home on June 1st. You the buyer would be responsible for the taxes from June 1st through June 30th. The seller would be responsible for the taxes from Jan 1st through May 31st. As the taxes were paid in April the Seller would receive a credit which would be prorated for the number of days in the month of June, and you the buyer would receive a debit for the same amount, thus ensuring that each person would be responsible for the days of his or her ownership. - Thu Feb 18, 2010