Aside from the down payment you pay upon the purchase of your house there is still an existing fee that you have to pay in order to complete the transaction and this is the Closing Cost. Many are not familiar with the concept of closing costs so here is a simple guide to help you understand this concept.

According to HighProfileRealty.comclosing costs is the bundle of fees associated with the buying or selling of a home. Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract. The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the "closing". It is common for a variety of costs associated with the transaction (above and beyond the price of the property itself) to be incurred by either the buyer or the seller. As a rule of thumb, closing costs to buy a home run about 2 to 4 percent of the purchase price. Much depends on the points and origination fees a lender charges to make the loan, which are disclosed on the buyer's Good Faith Estimate.

The buyer and the seller have their own share in the closing cost. According to HighProfileRealty.com when a buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Here are some typical buyer closing costs mentioned in HighProfileRealty.com:

· The down payment

· Loan fees (points, application fee, credit report)

· Prepaid interest

· Inspection fees

· Appraisal

· Mortgage insurance (typically 1 years premium plus an escrow of 2 months)

· Hazard insurance (typically 1 years premium plus an escrow of 2 months)

· Title insurance

· Documentary stamps on the note

Sellers also have their dues in paying closing costs. If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Here are some typical seller closing costs mentioned in HighProfileRealty.com:

· Broker's commission

• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property taxes (prorated)

At the closing, certain costs are often prorated (or distributed) between buyer and seller. The most common prorations are for property taxes. This is because, according to HighProfileRealty.com, property taxes are typically paid at the end of the year for which they were assessed.

Closing costs can be negotiated. In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. Ask for justification for each lender-charged fee. If the lender charges an underwriting fee as well as a processing fee, ask for details of those services. Maybe you'll find a fee that can be waived or reduced. You should also recognize that some items are non-negotiable: taxes, city and county stamps, recording fees, prorated interest and reserves.

Be very well informed regarding closing costs to avoid being manipulated by your lenders or sellers. You can save a lot if you can maneuver yourself around closing costs.