When you begin to think about buying a home, an important part is saving for a down payment. Years ago, the majority of home buyers put down a minimum of 20% of the purchase price. That can feel daunting when you look at your budget and the amount you are able to save. Today’s home buyers on average put 3.5% of the purchase price down. This amount is more manageable. For a $300,000 home, you would need $10,500 for a 3.5% down payment.  Part of this amount will be deposited into escrow at the beginning. This amount is the “Earnest Money Deposit”. Typically, this amount is 1% of the purchase price. It can be more, however. This money will be applied to your down payment.

Other costs you will need to be prepared for are escrow and title fees. Typically, the buyer and seller split the cost of the escrow and title fees. You will need 1-2% of the purchase price in addition to your down payment. Approximately $2000 -$3000 for a purchase price of $300,000. Some sellers will help with a buyers' closing costs. This will need to be negotiated in your offer. Don’t be afraid to submit an offer asking for assistance! 

Other fees include home, termite and other inspections plus the cost of your appraisal. These fees vary depending on the size of the home. Once you have a complete picture of how much money you will need, you can begin to budget! Income tax time is a great time to buy if you typically receive an income tax refund. Also, make sure to ask your lender about down payment assistance programs. 

Remember, buying a home continues to be the best investment in your long term financial security!

 

As always, when you are ready to buy or sell, we are ready to help! Give us a call today to get started! 661-589-2222