How Much Cash Do I Need to Buy a Home

How Much Cash Do I Need to Buy a Home 

Buying a home can be a costly event and making sure you are well-informed before going into the process is KEY! There are often costs involved with buying a home that buyers are unaware of, so, it leaves many folks asking
"How Much Cash Do I Need to Buy a Home"?

Well, of course the first and best step is to contact a Realtor local to your area. A Realtor can work with your specific situation to draw up a close estimate of what you will actually need based on your housing budget. 

That being said, there are a few things you need to account for from the get-go.

1.) Down Payment - A down payment can range from 3% to 20% depending on the type of loan you qualify for. (Your Realtor can put you in touch with a recommended mortgage broker to help you determine this). For an FHA loan, you will need to put down 3.5% 

                                       So.. If you are buying a home for $250,000 you will need $8,750.

If you are not getting an FHA loan your down payment amount required will be higher. 

2.) Closing Costs - While some sellers will agree to pay your closing costs, in today's Colorado Real Estate Market, this is less and less likely. Your Realtor will certainly negotiate to try to get your closing costs covered, but, in case she or he cannot, it is best to be prepared. Closing costs (if you are getting a mortgage) are usually about 3% (sometimes less, sometimes more). 

                                     So.. If you are buying a home for $250,000 you will need about $7,500.

3.) Transaction Costs - During the home buying process you will want to hire a home inspector to ensure the home you are buying does not have any major issues. Most inspectors want to be paid at the time of the inspection and usually charge between $200-$400. In some transactions you will also want to pay for a Radon test, Termite test, Sewer Scopes, Electrical Certification, and Roof Certification. Each of these tests can range in price. Your Realtor will give you a more specific idea based on your transaction, but, it would be best to budget for about $1000 total. 

4.) Moving Expenses - Don't forget that you will likely have some expenses come up when you are getting ready to move. Utility transfer fees and new account setup fees, possible lease break fees (if you are currently renting), movers/moving truck/boxes/packing supplies, time off of work, new decor, etc. These costs will obviously be personal to you, but be sure to keep them in mind when preparing to buy. 

Buying a home can certainly be an expensive process, but, if you are well prepared ahead of time, it will make everything much easier. For some fun tips on saving money, check out 7 TIPS FOR SAVING FOR A DOWN PAYMENT.

For more home buying information, please feel free to contact me anytime!