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Buying a piece of property in America is never as easy as simply paying the asking price and moving in. There are taxes, fees, licenses and other red tape to wade through before the process is deemed legitimate in the eyes of the US government. These extra costs can quickly turn a good deal into a headache, but the paperwork is unavoidable in a country as mired in bureaucracy as the US.

For renters, the paperwork and cash involved is quite straightforward. Your lease to rent a property will require a deposit against damages, usually an amount equal to two months rent. In recent years, it is becoming more common to require a background and credit check as well before being approved for a rental lease. This carries a fee of around US$30 that the renter must pay and cannot be refunded if they are denied for any reason.

To sign off on a rental lease, you need only produce the required deposit cash and show a valid form of ID such as driving license or passport. By signing the lease you are then responsible for all the details contained within. The landlord has the right to withhold all of your deposit if you damage the property or break the lease.

To purchase a property in America the paperwork and costs are much more involved. Using a real estate agent to help manage the transaction is wise and can save you a lot of time and energy. If you can pay cash for the property, there is little paperwork involved. Until the final title transfer goes through you will have to put down a small deposit called Earnest Money that gives you first rights to buy the property. That money will go towards the cost of the property. Often, the owner and buyer will split the title transfer fee.

If you need to get a bank loan, known as a home mortgage, to pay for the property the paperwork starts to pile up. If approved by the bank, you will need to provide at least 20 per cent of the total property price in cash to get the loan. For minimal down payments like this, the bank will also require that you purchase home insurance to protect their investment. Home insurance can run as much as US$800 per year.

If you have the cash to lock down the mortgage the rest of the paperwork is straightforward. You must pay your monthly mortgage on time each month or the bank will foreclose on your home and kick you out. You can always pay off the entire loan early after you have reached a set time period. Of course, for the first few years of the mortgage you are paying the bank about 90 per cent interest and just 10 per cent on the principle.