Beginning homebuyers need to understand one essential aspect in the process of owning a MN house and sales contract, which is 'closing costs'.Some are not aware that closing costs are typically set at 15 percent of the sales price, and most lenders would require for them to be paid upfront. Achieving your goal of efficiently projecting your available funds and discussing your preferences in the arrangement of final price means being more prudent to identify them earlier, even if some lenders can roll them into the loan package.

It may be best to keep in mind that the lender base the maximum amount offered to you not on the net price (the sales price minus the closing costs) but from the actual sales price paid by the buyer. There are various ways in which closing costs are allocated and this may need the help of your realtor and lender if only to come up with the most agreeable plan for you to stay within your budget limit.

Having knowledge about the responsibilities of a buyer is the first prerequisite to understanding what closing costs are. As explained by Barron, the author of the book 'Smart Consumer's Guide to Home Buying', homebuyers must know that custom dictates allocation of closing costs and designates buyer and seller responsibilities, and not the law, as many believes it to be.

It is the buyer who typically settles all the fees and the loan’s the discount points. The lender adds all these at the end of the contract and may vary differently from one financial institution to another. Bankers typically assign this fee as part of your contract or may be waived for important customers, yet it is best that you have an exact idea what the estimated amount will be.

The buyer is also responsible in paying the premium of the homeowner's title insurance policy and has to ensure that this be settled before the purchasing begins. Most will agree that it is beneficial to have some extra cash in your hands to pay for the premium and to avoid getting it rolled into the loan. Note also how premium cost may vary from one insurance company to another. Before signing the contract, it may be wise to do a little research particularly on the insurance policy rates of homeowners or try to scout around for other possible choices. These costs constitute the seller's obligations.

Sales Commissions - are the fees apportioned to the buyer's and seller's agents. However, these may depend upon the real estate agent you chose to work with.

Inspection Costs - pertains to the expense of having various inspections and those that are required for homes prior to purchase.

Title Insurance - are part of the homebuyer's obligations although many people misconstrue that title insurance is no longer covered in the costs that they have to settle. However, title insurance costs are included in the closing cost and thus becomes the seller's responsibility.

When you know what closing costs are, you can have a better idea as to what your home's final price will be during the signing. In fact, in doing so, lenders can already provide you with information you needed earlier in the financing process such as the fees you will have to pay, the discount points, and everything else you need to know.