A home purchase could be the largest single financial transaction you carry out in your life. So, it's important to understand all the costs associated with it.

Lenders are required by federal law to issue a Closing Disclosure at least three business days before your scheduled closing date. Those days are meant to be a time to review your closing costs line by line and ask questions if something doesn't make sense.

You, as the buyer, are typically responsible for the bulk of the closing costs. However, closing costs can also be a matter of negotiation, so this list is a general rule. Your individual costs could vary depending on the terms of your contract.

Buyer costs

Title search: Before a property can be sold, it must be free and clear of any liens. A title company will perform a title search for anything outstanding. If they find something, the debt must be satisfied before the closing can take place.

Title insurance for the lender: If the property you're trying to purchase does have a lien against it, the title company will usually find it. However, in some rare instances, a lien is discovered after closing. This insurance protects your lender if that happens.

Home inspection: You should be prepared to pay for the standard home inspection as well as any other inspections that you request or are required by the lender.

Survey: The property survey will confirm the property's boundaries.

Loan origination charges: Sometimes, the fee for loan origination includes an application fee and an underwriting fee, and these will be listed on the closing disclosure. These are fees charged by the lender for processing your application.

Appraisal fee: Your lender will require an appraisal to ensure that you're not borrowing more than the home is worth.

Recording fee: The city or county in which the home is located collects this fee for recording the property purchase.

Escrow: If you plan to roll your taxes and insurance into your house payment, those funds will live in an escrow account until they are needed. Depending on the timing of your loan, you may have to hand over part of that at closing so there's enough money in escrow to pay the bills when they come due.

Discount points: Sometimes, you can negotiate a lower interest rate on your mortgage by purchasing discount points. The points are considered prepaid interest.

Seller costs

Property transfer taxes: The transfer tax is essentially a transaction fee for the transfer of the title from the seller to you. It's paid to the municipality where the home is located.

Title insurance: This is the same concept as the title insurance you bought to protect your lender, except this policy protects you in case a lien against the home is overlooked during the title search.

Property taxes or HOA dues: The seller must prepay any taxes that will be billed to you after the sale for days or months before you took ownership of the home.

Remember, this is a general list, and your own Closing Disclosure may contain other items. The big thing is to review the disclosure carefully and ask for clarification on anything that you don't understand.

If you have other questions about what happens at closing or you're ready to start looking for your next home, please contact me at (540) 353-0123 or email me at sonya@sonyadickinson.com. Be sure to like my Facebook page.