If you’re a first-time homebuyer, closing costs may take you buy surprise. These are additional out-of-pocket expenses that cover of a number of fees involved in the mortgage loan process. Closing costs generally amount to from 3% to 7% of the home’s purchase price. These expenses are on top of the sale price you negotiated with the seller.
Closing costs can include:
Some of these costs are upfront, before the property is officially sold, while others are paid at the time when you close on the sale and the loan. You will also probably have to establish an escrow account to fund your tax and insurance payments. Usually, you will need to prepay the first year of property taxes and home insurance premiums at closing.