2. Down Payment
When you borrow money for a home, any lender will ask you to contribute
some of your own money to the purchase of the house. Lenders usually
require a down payment of at least 20% of the sales price unless the buyer
purchases mortgage insurance. That means you would have to make a down
payment of $20,000 at closing to buy a home that costs $100,000. However,
with mortgage insurance, your down payment can be substantially lower. In
fact, under some mortgage insurance plans, you may even qualify for a no down
payment loan.
3. Closing Costs
Closing costs are fees charged by the mortgage lender and other service providers.
Some of these charges include mortgage origination fees,
credit report fees, discount
points, lender's attorney's fees,
document preparation fees,
land survey,
appraisal,
hazard insurance premium, title insurance premium,
release fees, inspection fees,
prepaid interest, and a
tax and insurance escrow account (also known as an impound
account). These costs are likely to be paid by you, the buyer, but local customs
vary. It is possible to have an agreement where the seller pays some or all of the
closing costs. Use our calculator to estimate your closing costs. Click here for an example of closing costs.
