No Down Payment: Hidden Pre-Closing Costs for Home Buyers

No down payment does not mean you do not have to have cash when purchasing a home. There are some hidden closing costs that the bank will hit you with through the closing process. Many of these expenses need to come out of the home buyer's pocket before they own the home. These are the expenses a potential home buyer faces before the additional bank closing costs.

No Down Payment: Hidden Closing Costs for Home Buyers

Hidden Real Estate Closing Costs: Purchase and Sale Agreement

in order to make an actual offer on a new house, a home buyer will need to pay their buyer's agent or real estate agent to write up a Purchase and Sale agreement. The amount varies, but it can cost $500 just to get an offer written. Consider it a good-faith deposit.

Another $500 may be due upon completion of the Purchase and Sale agreement. A typical Purchase and Sale agreement may be viewed at The Internet Legal Research Group.

Hidden Real Estate Closing Costs Running Tally: $1,000

Hidden Real Estate Closing Costs: One-Year Payment on Home Insurance

Again, depending on the type of mortgage you are securing, and the bank's rules, you may need to pay for the first year of home owner's insurance upfront. Home insurance rates vary from state to state, this figure is for Massachusetts: $370.

Hidden Real Estate Closing Costs Running Tally: $1,370

Home Inspection: $356*

A full-home inspection may be required before securing the loan. The home inspection checks the physical structure of the home.

Even a full home inspection may not cover all basic inspections required by bank, including a pest inspection, lead paint, Radon testing. and a well or septic inspection. Each home inspection company has their own menu of charges. Not all home inspection companies are licensed to do all of the tests.

Tip: Find out upfront form the bank which tests and inspections they require. They do not always give you the entire list upfront, but rather they stagger the information so the home buyer does not change their minds when they see the total pre-purchase costs.