Embarking on the journey to homeownership can be thrilling, yet it often comes with numerous questions. One of the most common inquiries that prospective buyers have is, “how much money do I need to buy a house?” This is a crucial factor in your planning and budgeting process. Let’s break it down with Priority 1 Lending, so you have a better understanding of what to expect.Verify my mortgage eligibility (Dec 9th, 2023)
- Down Payment: The down payment is the initial payment you make towards the purchase price of your home. It is typically expressed as a percentage. While the traditional amount is 20%, many lenders, including Priority 1 Lending, offer mortgage products that require as little as 3-5% down. Your down payment can significantly impact your monthly mortgage payments, so consider your options carefully.
- Closing Costs: These are the fees and expenses you pay to finalize your mortgage, and they usually range between 2-5% of the loan amount. They include various charges such as appraisal fees, title insurance, and origination fees. At Priority 1 Lending, we will provide you with an estimate of these costs early in the mortgage process to help you plan.
- Earnest Money Deposit: This is a deposit made to the seller indicating the buyer’s serious intent to purchase the property. It typically ranges from 1-3% of the home’s purchase price. It’s not an additional cost, as it gets credited towards your down payment and closing costs at closing.
- Home Inspection Costs: Before closing on a house, it’s advisable to have a home inspection done. The inspection can reveal potential issues that could turn into costly repairs down the line. This cost varies but typically ranges from $300 to $500.
- Appraisal Fee: Your lender will require a home appraisal to assess the property’s value before finalizing your mortgage. This ensures the amount of money you are borrowing aligns with the home’s market value. This fee usually ranges from $300 to $400.
- Moving Expenses: Don’t overlook the cost of moving. Whether you hire professional movers or rent a truck and do it yourself, moving comes with costs that should be included in your budget.
- Immediate Maintenance and Repair Costs: If the home inspection reveals necessary repairs or if there are improvements you want to make right away, you’ll need to budget for these expenses too.
- Homeowner’s Insurance and Property Taxes: These are ongoing costs that you need to consider. You’ll pay them as part of your monthly mortgage payment or separately, depending on your loan structure.
- Extra Cash for Unexpected Expenses: It’s also wise to have a safety net for unexpected costs related to your new home. You never know when a surprise expense will pop up.
At Priority 1 Lending, we’re here to help you understand all the costs involved in buying a house and guide you through your home buying journey. Our team of experts can assist in helping you plan your budget and find the best mortgage options for your needs. Contact us today to get started on your path to homeownership.Show me today's rates (Dec 9th, 2023)