An Explainer: Closing Cost

From the beginning to the end, the house purchase process demands expenditures at various stages. At the initial stage, you have to pay a token amount to the developer and the process ends with you settling the deal by playing the closing cost. Typically, a closing cost includes the money you pay for securing home insurance, the appraisal fee you pay to the bank for carrying out an inspection of your house, the money you have to pay to your legal expert and the money you pay in the form of various taxes. While these might look like small expenses when seen in isolation, these could burden you excessively when combined together.

Be mindful of the fact that if you are taking a home loan for the purchase, the bank will not factor in these costs. They generally lend you 80 per cent of the value of the property. As a buyer, you are expected to pay for all the extras expenses, including the closing cost, from your own savings. In a nutshell, being ready with the down-payment for the purchase is never enough. You also have to pay equal importance to the unforeseen expenses you will have to incur during your home purchase and start saving accordingly.