You need to expect to pay closing costs in order to buy a home. These are fees on top of the sales price that are due before you actually own the property. Often times, closing costs will be around 4% of the purchase price, but can vary by quite a bit.
The closing costs for buyers include Loan processing and recording fees, Credit report, Escrow and Title recording fees, Title insurance, Appraisal fees, Inspection fees, Homeowners insurance, Prorated Property taxes, Prorated mortgage interest charges for the month.
The total amount of cash that you will need to buy a home includes all of the closing costs as well as your down payment. For example: If you are buying a $150k home, and you decide to put 5% down, the total cash you need to get into your new home will be quite a bit more. While your down payment is only $7500, your total closing costs will likely be around $6500, for a total of $14000.
You can find a free closing cost calculator online to get a better idea of what you will need to pay when buying a house in your area. While the initial cost to buy a home can be quite expensive, the benefits far outweigh the challenge it takes to save enough money for home ownership. Also, sometimes the closing costs can be much less, as little as a few hundred dollars. This could be because you are able to pay cash for the home instead of getting a loan, or because of the way the terms are negotiated in the contract. It is possible for the seller to pay some or all of the costs that the buyer normally pays.
It is best to talk with a real estate agent in your area before you begin looking for a home. You will then want to talk with a loan officer and get pre-approved so that you know exactly what you are able to buy. There are many types of loan programs available that require almost no money down. After talking with your realtor and loan officer, you will have a very good idea of the exact amount of money you will need to buy a new home.
Written by Kelly Jensen, is a licensed Realtor in Boise, Idaho. He specializes in helping people buy and sell property throughout the Treasure Valley.