Saving for a down payment in preparation for buying a new home is pretty common knowledge. With the mortgage meltdown, most mortgages that allowed zero down payments disappeared. While FHA and VA loans still offer little to no money down, most potential homebuyers will need to save at least 3-20% of the home value.
Unfortunately, many first-time homebuyers are dismayed to learn that in addition to the down payment, they also owe thousands of dollars in closing costs that they might not have expected. Fortunately though, the seller may pay some of your closing costs in the form of seller assist. In addition, while not a closing cost, most lenders also require a savings reserve equal to at least one to two months of the mortgage payment. Needless to say, it adds up.
Let’s break these costs down:
Closing costs include fees charged by the title company as well as well as costs associated with obtaining a home loan, including:
• Loan Fees
• Appraiser Fee
• Title Company Fees
• Title Insurance
• Homeowners Insurance
• Home Inspection Fees
• Transfer Tax
• Tax Escrows
• Tax Reimbursements to the Seller for pre-paid Taxes
These are just a few of the extra costs associate with buying and closing on a new home. It’s important to know these costs ahead of time, so potential homebuyers can save the appropriate amount of money needed to buy a home. Nobody wants to be surprised by unexpected costs and end up missing out on the perfect property.