If you are a first time homebuyer, you may not be familiar with some of the costs associated with purchasing a home. Owning a home is definitely better than giving your money to a landlord every month, but there are some things you need to make sure you save for when making a purchase. 1. Earnest Money. If you place an offer on a home it is typical to offer earnest money to let the seller know you are serious about buying their property. While you may be able to get away without submitting an earnest money deposit as part of your offer, your chances of getting the offer accepted could diminish if you choose to submit a low ($100) or no earnest money deposit. A typical earnest deposit is anywhere from $500.00 to $1000.00. This can vary greatly depending on what the market is like in your area. Some areas may require much more. Another thing to keep in mind is that your earnest money deposit isn't just free money you are offering the seller, it will work as a credit toward your down payment or closing costs. If you are working a program with no down payment and the seller is paying your closing costs, you may get your earnest money credited back to you at closing. 2. Down Payment Money. When buying a home today, chances are you are going to need some money available for a down payment. There are a few programs available that may allow you to purchase a home with $100.00 down or others may even allow less. If you obtain an FHA loan and your credit is in pretty good shape you can expect to bring 3.5% of the purchase price to the table for a down payment. If you obtain a conventional or insured conventional loan, you should expect to bring 5-10%. Again, there are various programs, with varying requirements. Check with various lenders to determine what's out there. 3. Money for Closing Costs. Closing costs are essentially any fees that must be paid at the closing table. These fees include things like application fees, credit report fee, title search and insurance fees, appraisal fee, advanced payment of homeowner's insurance, recording fees, surveys, among others. Closing costs are typically anywhere from 3%-4% of the purchase price of the home. It's also good to keep in mind that you can request assistance with paying the closing costs when making an offer on a home. In many cases you may be able to request all or most of them be paid by the seller. 4. Money for the Home Inspection. If you are in the process of purchasing a home, it is HIGHLY recommended that you obtain a home inspection by a reputable company. You can expect this to cost anywhere from about $300.00 to $500.00. There are also additional inspections you may want to obtain like a termite, Radon, Mold, Septic, Pool and Spa, Asbestos, and Well water quality inspection. While there may be other items you need to invest in when purchasing a home, these are the most typical expenses you'll incur. ____________________________________________________________________________________________________ Please feel free to contact me with any questions. Search homes currently on the market
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