How Much Money Do You Need To Buy A HomeMany people haven’t bought a house because they believe they don’t have enough money to do so. There are a lot of myths about how much money you truly need to buy a home. Unfortunately, many don’t question the information they’ve heard as fact, even if that information is wrong. If you haven’t started looking at homes for sale in Windsor Island Resort because you don’t think you have the money needed to buy one, take a look at the information we’ve gathered. You may be surprised to learn that you have enough money to buy the home of your dreams.

Not All Roads to Homeownership Are the Same

It’s important to understand that there are different ways you can purchase a home. There are a plethora of financing options, most of which require less than 20% down!  If you get a conventional mortgage, you may need a higher down payment (but still not 20%) than you would if you went through FHA financing (as low as 3.5% down). If you’re in the military, you can qualify for a VA mortgage (you might not need any money down!), which can also greatly reduce your down payment. The myth that you have to put 20 percent of the purchase price down may have been true once, but it’s definitely not the case today. While it will save you money in the long run by having a large down payment, it’s no longer necessary.

Other Costs

Many people don’t realize that there are a number of other costs in addition to their down payment. When you make an offer on a home, you will be expected to pay earnest money right away. This earnest money could be as low as $500 but is often around 1% of the purchase price.  Each state, city, agent and transaction is different, so we're just giving the you spectrum here. This money is basically a deposit that says you’re serious about purchasing the home, and it will be credited to you at closing.

As the buyer, you will also have to pay for your home inspection and appraisal. You can pay for these costs upfront, or the fees may be able to be rolled into your closing costs. Talk to your real estate professional to find out what options are available to you. If you’re paying for them yourself, inspections are generally around $400, while appraisals can run between $350 and $500. To be safe, assume you’ll need $1,000 to cover both. Note that you can waive the home inspection, but that is a very risky thing to do.

There are some incidental costs you may incur during the buying process. If the home has a swimming pool, for example, you may need to have an additional inspection done. Often, there are no incidental costs. If there are, they’re usually no more than $300.

Closing Costs

You’ll have a number of costs due at closing. These include property taxes, title company fees, lender fees, homeowners insurance, and other costs. One of the things buyers often ask for during the negotiation phase of buying a home is that the seller pays some or all of the closing costs. Sometimes the seller will agree to this, but sometimes they won’t. There are certain other programs that can help you reduce the amount you pay at closing. Your agent can point you towards these resources.

The Overall Amount of Money Needed to Buy a Home

The bottom line is that the cost to buy a house does vary depending on your loan type, inspection and appraisal costs, and the amount of earnest money you’ll have to put down. Your closing costs can also greatly vary depending on what the seller is willing to offer. Overall, though, most people need around 5% of the purchase price to buy a home. That’s much less than the 20% that used to be standard.

The Breakdown

  • Downpayment - as low as 3.5% (FHA Loan)
  • Closing costs - up to 1.5% (if you can get seller to help, if not, then up to 4%
  • Out of pocket costs - $1,000 

Let Us Help You

If you’re ready to buy a home but are concerned about the finances, contact Florida Realty Marketplace today. We will discuss your options and help you determine if now is the right time to buy a home.

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