Cash Needed

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. This is your Down Payment. A lender will usually require a payment of at least 20% of the sales price unless the buyer purchases mortgage insurance. However with mortgage insurance you may be able to make a down payment of as little as 3%.

Closing or Settlement is the formal process of transferring the property title from the seller to you, the buyer. When you apply for a loan, the lender will give you an estimate of the closing costs. Closing costs may include: origination fees, costs of processing your loan, items paid in advance (first-year mortgage insurance premium, first-year hazard insurance premium), escrow accounts (reserves deposited with lender) hazard insurance, mortgage insurance, property taxes, title insurance charges, recording and transfer charges and escrow fees.

Sometimes the seller of the house may agree to pay some of these costs. You might expect to pay closing costs from 1% to 6% of the amount of your mortgage loan. And remember - the closing costs are in addition to your down payment.