Okay, so you’ve found your dream home and you’re ready to get the process started. You made the decision to buy and you want to know what the upfront costs of buying a home will be. Although the amount of upfront costs vary home by home, you can expect to pay costs in these three categories:
These costs are the standard fees associated with processing your loan and title company services. Closing costs vary between lenders, but you can expect to pay at least 3% of the total price of your home. If you choose to hire a mortgage broker you should plan on spending a little more to pay them for the extra services.
Although nobody enjoys paying closing costs there is some good news. In many situations you will be able to negotiate the seller to pay some or all of the closing costs. It never hurts to try!
You’ll be hard-pressed to find a loan that doesn’t require a down payment these days. Depending on the type of loan you get, the percentage will range from 3% to 20% of the total cost of the home. In order to avoid paying mortgage insurance you’ll need to cover 20% of the cost.
Most of the upfront costs of buying a home are accounted for in the two sections above. However, some miscellaneous fees do occur. You can expect to pay a little bit in at least one of the following categories: credit report fee, appraisal fee, inspection charge, and application fee. Although you may not need to pay all of these, you should plan on 1-2% of the cost of the home to cover these costs.
We hope this guide helps you plan for the upfront costs of buying a home. If you have any specific questions about how to plan for the purchase of your new home, please get in touch! Please feel free to comment with anything we may have missed.