How Much Money Does It Take to Buy a Home?
When it comes to buying a home, in general, you’ll need to come up with enough money to cover three costs.
The first is “earnest money.” This is a deposit you make on the home when you submit an offer to prove to the seller that you are serious about wanting to buy the house.
Next comes your down payment. This is a percentage of the purchase price that you pay when you go to settlement.
And lastly, closing costs. These are costs associated with processing the paperwork to buy a house. Your REALTOR® will put your earnest money into an escrow account. If your offer is accepted, the earnest money will be applied to your down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of earnest money required varies… so ask your REALTOR®.
The more money you put into your down payment the lower your monthly mortgage payments will be. Some loans require a down payment of 10 to 20% of the purchase price – which is why many first-time homebuyers turn to f-h-a loans that require very little down.
Closing costs are paid at settlement and typically average 3 to 4% of the home’s price. These costs cover processing expenses and various fees that your lender charges. When you apply for your loan, your lender will provide you with a detailed estimate of what your closing costs will be.