What Will a New Home Cost?

Many homebuyers know they need to save money to purchase a home, but how much and where is all that hard earned money going? In this article, we will discuss the various costs and expenses that come with buying a home.

Down Payment

Most people are aware that they need to make a down payment when they buy a home. Unless you are eligible for a USDA loan in a rural market or a Veteran eligible for a VA insured loan, you will need to make a down payment. Down payment requirements will range based on the type of loan.

First Time Home Buyers can qualify for Conforming loans with as little as 3% of the sales price as a down payment. Conforming loans for non-first time buyers will require at least 5% down payment. Borrowers wishing to avoid Private Mortgage Insurance will need a 20% down payment.

Closing Costs

The amount of the closing costs will vary based on the purchase price, loan amount, and the state in which the property is located. Closing costs are generally broken out between lender fees, third party fees, recording fees and transfer taxes.

Our article on Navigating Common Mortgage Fees provides a detail of all the different types of closing fees you can expect.

The main thing to shop for is the lender fees. Be sure to check out our article on How to Shop Different Lenders to learn the best practices when comparing multiple offers from mortgage companies.

Pre-Paid Items and Escrows

At closing, you will also need to pay upfront items related to taxes and insurance as well as establishing your escrow account for taxes and insurance. If your property belongs to a Home Owners Association (HOA), there may be additional upfront HOA dues required to be paid at closing.

Moving Costs

Depending on your situation, moving can be a breeze or a real expensive pain! Don’t forget to check with moving companies if that is a something you will require.

Updates & Furnishings

Keeping some cash in your pocket is always a good move, especially when buying a new home. There may be cosmetic things you want to do to the home or you may need to buy new furniture. Saving some cash for these options is a better move than using credit cards to finance your renovations or furnishings.

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world, but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.