Are you considering purchasing a home? Understanding the financial aspects of homeownership is crucial, but it doesn’t have to be overwhelming. Let’s break down the key expenses you’ll need to save for, ensuring you’re well-prepared for this investment.
Hey! I’m Anita L Williamson, Associate Broker at James River Realty Group.
Here are 5 expenses you may incur when purchasing a home that you want to make sure you have saved for:
A Down Payment
Number 1: A Down Payment. Saving for a down payment is a priority for most homebuyers. But do you know how much you’ll need? While every buyer’s situation is different, since there are 0% down loans like VA and USDA and also grant programs that will pay some buyer’s down payments. You should be prepared to pay for a down payment. Consult with a local lender early on to explore your options and determine the best approach for your situation. But remember the 20% is a myth as many buyers put down much less.
Closing Costs
Number 2: Closing Costs. Don’t forget to budget for closing costs, which typically range from 2 to 5 percent of the mortgage. The best way to understand what you’ll need at the closing table is to work with a trusted lender. They can provide you with answers to the questions you might have. While negotiating with the seller to cover some of these costs is possible, it’s wise to be financially prepared to cover them yourself, especially in today’s competitive market.
The Earnest Money Deposit
Number 3: The Earnest Money Deposit. An Earnest Money Deposit is money you put into an escrow account as a show of good faith when you make an offer on a house. It’s usually between 1% and 2% of the total home price. It’s held in an escrow account and will be applied toward your closing costs upon completion of the sale.
The Inspection Costs
Number 4: The Inspection Costs. It’s essential to budget for inspections to assess the property’s condition thoroughly. While a general home inspection and radon test are common, additional inspections may be necessary based on the property’s condition. Budgeting around $1,000 for inspections ensures you’re adequately prepared.
The Appraisal Fee
Number 5: The Appraisal Fee. Lenders often collect the appraisal fee upfront to ensure the appraiser’s payment, regardless of the sale outcome. While this fee is included in the closing costs, it’s paid before closing, so budget accordingly.
Being informed about these expenses is crucial for a smooth home-buying experience. If you’re ready to embark on this journey, join my virtual home-buying seminar for more information. Additionally, reach out to schedule a buyer consultation, where we can discuss the specifics of your home-buying process.
I’m Anita L Williamson helping you establish roots in Central Virginia.
