Before submitting any money, predetermine both your closing costs and down payment using the following seven simple steps.

Purchasing a new home can be somewhat complicated and overwhelming, especially if you are a first time homebuyer. However, with the proper research and preparation, the closing and purchase can be relatively easy. In order to determine how much your new home costs, for both the long term and short term, you’ll need to figure out the down payment along with any closing costs that will be due once it comes time to settle. According to HUD (Department of Housing and Urban Development), mortgage lenders are required to provide homebuyers a Good Faith Estimate prior to administering the loan. If your closing costs vary a great deal from the Good Faith Estimate, talk it over with your lender and ask why prior to the settlement.

1. Calculate Your Down Payment
Down payments may vary due to such factors as the type of mortgage, the individual’s income, their credit history, and the entire cost of the new home itself. For instance, if your new home costs $80,000 and you’re pre-approved for a 3.5% FHA loan for your down payment, then the amount of your total down payment equates to 3.5% of the total cost for the home. To determine this calculation, simply slide the decimal point two places to the left on the percent – .035. Next, take that number and multiply it with the total cost of the home – $80,000. Therefore, the total down payment for your new home is $2,800 in this example.

2. Calculate Your Closing Costs
The first step is to total up any costs that are relative to your mortgage loan. These may include home appraisal, flood certificate, loan origination, tax service, credit report, and underwriting fees. You can always find more information online regarding information on how typical closing costs are calculated and the general guidelines to buying a home as well.

3. Add together any title charges you may have such as title policy fees, courier fees, endorsements, or closing fees.

4. Account for any insurance fees or interest fees that might be necessary when it comes time to close.

5. Add up any necessary escrow costs you may have. Escrow costs are occasionally required by the lender. They help to ensure that the homebuyer has enough funds in order to meet all of the financial requirements.

6. Tally up each of the totals you calculated starting with steps 2 – 5. This new amount is your actual closing cost.

7. Lastly, add together the amount of the closing cost with the amount of the down payment. This total should be very close to the amount you will need at the time of closing.

Follow these seven steps to get a good idea of the dollar amount you’ll need to get into your new home.