Whether you're buying your first home or your fifth, it's easy to forget about the closing costs. You've probably spent your time focused on saving up for your down payment and using this number as the basis for how much house you can afford — but that 3 to 20 percent down payment isn't the whole story. 

You'll also need to consider all the closing costs on the back end of your transaction.

What Are Closing Costs?

Closing costs — also called settlement fees or settlement costs — are the little amounts of cash here and there that get paid out to everyone who has had a hand in your real estate transaction. After all, the appraiser doesn't work for free, and neither is your mortgage lender. Everyone gets paid, and closing costs can add up to anywhere between one to six percent of the final price of your home.

That means that if you've been planning on a three percent down payment with an FHA loan to purchase your home, your closing costs could double the total amount of cash you need in hand to buy your house. If you're not ready for that, you could really feel squeezed at closing— or run the risk of having your purchase fall through altogether.

Typical Closing Costs

Though closing costs vary by location and in each transaction, you can expect to see types of charges during the closing process or on your lender's good faith estimate when you take out your mortgage loan:

  • Lender fees (including the loan origination fee, fees for"points"on your loan, underwriting fees and more)
  • Credit reporting costs
  • Title services (including title insurance and title searches)
  • Appraisal fees
  • Up-front homeowners insurance payment
  • Up-front property tax payments
  • Attorney fees
  • Government fees, recording costs and additional taxes
  • interest you owe on your mortgage from the day of closing until the end of the month
  • Home inspection fees
  • HOA fees or dues

While some of these costs may be paid out of pocket as they occur, most come due when you sit down to sign all the paperwork to transfer ownership of the property. These things add up, so knowledge is your best weapon to avoid a nasty surprise and a scramble to come up with extra money while you're trying to pack and plan your move. Your good faith estimate will spell outmost of these costs, so ask your lender to go over them with you so you can start saving up. You can also do your own research about typical closing costs, but bear in mind that these vary greatly by location— especially taxes and government fees. Your real estate agent is also a great resource to turn to for a sense of what to expect, since he or she has years of experience closing deals in your local market.

Put Your Real Estate Agent's Expertise to Work for You

On the bright side, working with an experienced real estate agent gives you a big advantage when it comes to the closing cost game. Most seasoned Realtors are well connected in the community and will be able to point you to reputable professionals — think home inspectors, appraisers, insurance agents, lawyers and even lenders that offer low- or no-closing cost mortgages.

A savvy Realtor also knows how to negotiate everything about the cost of your home, not just the selling price. This means your real estate agent can work on your behalf to potentially get the seller to pay a portion of the closing costs as part of price negotiations to finalize the sale.