The purchase price of a home is not only the amount you have agreed to pay the seller. First-time home buyers should be aware that eventually they will be faced with a baffling array of fees for everything from title insurance to property taxes. These fees are called closing costs since they must be paid at the time the transaction is "closed," and the title to the property passed from the seller to the buyer.

It is at the closing that all monies are exchanged, fees paid, and title to the home officially passed from one to another. In response to many complaints and much confusion among buyers and sellers, the Real Estate Settlement Procedure Act (RESPA), was passed in 1974. Under RESPA, the lender is required to provide you with a list of closing costs, as well as a list indicating exactly what documents and services must be presented or completed before the closing.

Closing costs usually equal 2 to 3 percent of your new home's sales price. Usually, you have to pay these costs in cash, in addition to the money you've earmarked for a down payment. Your lender may agree to add the fees to your total loan amount, though, so you can pay them off in monthly installments.