There are a few different types of expenses for buyers to prepare for, in addition to the down payment. If you offer $100,000 with a 20% down conventional loan, there's more to the story than showing up at the closing with a check for $20,000.
In a cash deal, closing costs for a buyer are cheap and minimal. The real costs come with getting a mortgage. When working with a lender, the loan officer is required to provide a good faith estimate of all these costs, around the time that the loan application is completed.
A lender's lawyers would not likely allow them to publish a projection of costs like this, but here we are just discussing the costs that I have seen as typical over my real estate career. Costs vary significantly, but can be broken down in to these categories:
- Mortgage costs: Origination Fee, Processing Fee, Appraisal Fee, Discount Points, etc
- Closing/Title costs: Lender's policy, title search and abstract, closing fee
- Other Costs of buying property: Home Inspection, Homeowners insurance, pro-rated property taxes, prorated HOA fees & start up fees, Survey, Termite inspection
At the time that you contact the Mortgage Loan Officer for a prequalification letter, ask for a rough idea of the closings costs that you need to anticipate. Often, you can negotiate the seller to contribute a concession towards your closing costs. This strategy will minimize your cash used up front, and can preserve your cash for things like movers, furniture, and reserves.