After you find the house of your dreams, you might think the hard work is done. After all, you've crunched the numbers to make sure you can afford it and saved money for a down payment. But did you know that you need to put additional money aside for the end of the process?

When you, the buyer, and the seller agree on a purchase agreement, you both select a neutral third party to act as an escrow agent. This agent collects earnest money from you, and this money is a deposit that's equal to a small portion of the property's sale price. This deposit shows that you're serious about purchasing the property, and if the contract falls through due to an issue on your part, the seller typically keeps the money. However, if the home purchase is successful, the money is applied toward your down payment.

In return, the seller takes the home off the market. The money is kept in an escrow account until the transaction is complete. Before the final closing of the property, your money and the seller's property are said to be in escrow. If you're buying a brand-new home, the money usually stays in the account until you've signed off on all the work. Once the conditions are approved, the money goes to the correct party.

Escrow services for a home purchase typically cost between 1% to 2% of the final price of the home. If your home is $200,000, this equates to $2,000 to $4,000, which is added to the rest of your closing costs. Keep in mind that escrow fees are usually negotiable between you and the seller, so you can even ask the seller to pay for all or a portion of the escrow fee, depending on the market and local laws.

If you have any other questions, your mortgage broker or loan officer can guide you through the entire process. They can also work with the seller to negotiate the escrow fee.

Sources: Rocket Mortgage, Valuepenguin.com, CapitalOne, Moneyunder30.com