Get out those piggy banks! Saving for a down payment in preparation for buying a new home is common knowledge — sadly most mortgages that allowed zero down payments have long disappeared. While FHA and VA loans still offer little to no money down, most potential homebuyers will need to save at least 5-20% of the home value.
However, there are some additional costs that many first-time homebuyers are dismayed to learn about (getting you in the know is why we’re here!). In addition to the large down payment, they also find they unexpectedly owe thousands of dollars in closing costs (ouch!). Just as an FYI, the national average for closing costs ranges from 2-4% of the purchase price, which adds considerably to the amount of savings needed to buy a home. There’s one more as well; while not a closing cost, most lenders also require a savings reserve equal to at least two months of the mortgage payment. Needless to say, it adds up and can make for a sad piggy bank indeed!
To ensure you don’t have any surprises when buying a home, let’s break these costs down!
Closing costs include fees charged by the escrow or closing attorney, as well as costs associated with obtaining a home loan, including:
- Escrow fees
- Title search and filing fees
- Appraisal fees
- Home inspection fees
- Wire transfer fees
- Loan costs – These include what are termed “points”; each point is 1% of the purchase price and is used as both commission for the lending officer and as an upfront fee to reduce the loan interest rate.
Phew! Though this seems like a long list, don’t be discouraged — knowledge is power! It’s important to know these costs ahead of time, so potential homebuyers (like you!) can save the appropriate amount of money needed to buy a home. Nobody wants to be surprised by unexpected costs and and end up missing out on the perfect property.
Anytime between “now” and “right now” is a good time to take action on shaping your best life, and that includes where you live. Let’s get the ball rolling on your next steps.
(702) 374-6807. Or drop me a line here.
