When you purchase a home, whether it be a newly constructed home or a resale home, you must account for various services and fees in addition to the down payment of the home.
The sum of these services and fees are what is called your "closing costs":
Services and fees you may likely have to pay at the "close" of your transaction include:
Attorney Fees
Title policy Fees
Recording Fees
Transaction Stamps or taxes - charged by the government as an excise tax
Points - if you are buying down the interest rate
Appraisal fees - charged by the company performing the appraisal of the property
inspection fees
& document prep fees just to name a few.
In addition, You will also pay for pre-paid expense items such as:
pro-rated insurance and pro-rated interest, both of which will be adjusted according to the time the transaction is closed.
As a general rule of thumb you can expect closing costs to be roughly 2-3% of the purchase price, dependent upon the loan type chosen.
If you are going to receive a mortgage to purchase a home, your mortgage provider will supply you with an initial fees worksheet, which will itemize the estimated closing costs of the loan
