When you buy a home, chances are you are going to need a loan. A house might be the largest investment of money you ever make in your lifetime. For that investment, unless you have approximately $250,000 sitting around in a bank account (bad idea, by the way – savings are only FDIC insured up to $100,000 – but I digress!) chances are you are going to need a loan.

To get a loan, you are going to need to pay credit reporting fees, appraisal fees (on the home you are about to buy), processing fees, and amongst others, points to get the mortgage rate down to where you want it. A point is 1% of the loan amount and brings your mortgage interest rate down by about an 1/8.

Besides the loan fees, you are also going to pay half the escrow costs. Escrow fees are negotiable between buyers and sellers, however the standard in Sacramento seems to be that the costs are split 50 – 50 between both parties.

All these fees, including your down payment is usually required by the title company at the signing of your loan documents, before closing, in the form of a cashier’s check. These are closing costs. Without the down payment, they usually add up to about 3% of the total purchase price and usually you can have them paid by the seller. You may be required however to raise your purchase amount by that number, so the costs get added on to your loan.

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