Purchasing a new home is always a fun adventure for wannabe homeowners, but what does it really take to buy a home. And that takes knowing how much monies you’ll need, securing a good interest rate, selecting the best lender, choosing a home inspector and knowing the costs for due diligence and home inspection.
The Costs are More than a Down Payment
How much of a down payment depends on the mortgage lender. Mortgage lenders generally require from 5 to 10 percent down. And VA loans may cost as little as 3.5 percent down. However, if you want to avoid paying private mortgage insurance, you’ll need to reach deep for a 20 percent down payment.
Many folks focus on how much they will need for a down payment, but there’s more to the financial picture than just the down payment. Closing costs, escrow for real estate taxes, utility adjustments and required cash reserves by the lender are required. On average, closing costs add up to 3 percent of the loan amount. For example, the closing costs on a $200,000 mortgage can add up to $6,000. Keep in mind that you can negotiate the closing costs with your lender.
Most lenders require one to two year of real estate taxes in escrow and the prepaid expense of one year the cost for a homeowner insurance policy. Factor in cost adjustments for things like the oil tank and homeowner association fees. Cash reserves required by lender typically up to two months of the mortgage payment. And the lender will want to check those cash reserves. Cash reserves can be kept in checking accounts, savings accounts and money market funds.
Of course, you’ll want to know the status of the home’s structure, insulation, electric system, plumbing system, HVAC and insulation. Part of due diligence is investing in a home inspection report. Turn to Keith Knight of A Close Look Home Inspections. Keith Knight is a certified inspector with experience and a keen attention to detail. Learn all about your home’s condition with A Close Look Home Inspections. You’ll get all the data needed in order to make an informed decision. After all, you don’t want any unexpected surprises after you move in.
Buying a home is likely the most expensive investment that you’ll make in your lifetime. Knowing how much you really need and investing in a home inspection report will help you achieve that American dream.
Contact On Point Carolinas Realty
As a home buyer, you should weigh you options. Contact us at On Point Carolinas Realty for help getting started on you home buying journey.