DOWN PAYMENT
You're now prepared to begin saving for a down payment. Despite the fact that some people believe the misconception that buying a house with all cash is difficult, I want you to know that it is possible and that it happens all the time. If you're having a mortgage, however, we'll go through some saving goals that will help you buy your dream house.
Saving
Buying a home the smart way, like any other goal, requires planning and preparation, particularly if you're taking out a mortgage. Putting together enough money for the down payment, closing costs, and moving costs is the most time-consuming process—but don't give up. I'm planning to give it one step at a time.
To give you a better idea of what this move requires, calculate how much money you'll need to save if you want to buy a $200,000 house, townhome or condo:
Down Payment: 3% = $6,000.00 Closing Cost: 3-4% = $6,000-$8,000.00 Total: 6-7% = $12,000-$14,000.00
Down Payment: 4% = $8,000.00 Closing Cost: 3-4% = $6,000-$8,000.00 Total: 6-7% = $14,000-$16,000.00
Down Payment: 10% = $20,000.00 Closing Cost: 3-4% = $6,000-$8,000.00 Total: 6-7% = $26,000-$28,000.00
Down Payment: 20% = $40,000.00 Closing Cost: 3-4% = $6,000-$8,000.00 Total: 6-7% = $46,000-$48,000.00
Down Payment
I suggest saving for a down payment of at least 10–20 percent of the home's purchase price before you find your home. Sure, 3%–20% of the purchase price is a significant sum of money. Let's say you want to save $12,000–$48,000.00 for a down payment on a $200,000 house, townhome or condo. You could save the down payment in 12 months to three years if you cut out needless expenses and set aside $1,000 of your monthly budget.
FYI: If you put down 20% or more on a home, you will stop paying private mortgage insurance (PMI), which is a recurring fee that prevents your lender (not you) from losing money if you default on your payments.
Closing Costs
Closing costs account for 3–4% of a home's selling price on average. When you close on a property, which is essentially just signing all of the paperwork that makes your new home yours, you'll have to pay for things like:
Loan Origination Fees
Appraisal Fees
Title Fees
Underwriting Fees
Credit Reports
Remember to account for property taxes and homeowner's insurance, which lenders refer to as prepaid items. Until closing, your real estate agent (myself) and lender will provide you with a full list of these expenses in which is referred to the CD.
Moving Expenses
You will still save money on moving expenses by recruiting the support of colleagues. Otherwise, depending on how much stuff you're moving and how far away your new home is, hiring movers will cost anything from $800 to $2,000+. If you decide to go this path, get quotes from local moving companies ahead of time to help you budget.
Other moving expenses, such as service transfer fees and any urgent home changes, should be factored into your budget as well (like painting or installing blinds). If you don't have enough money set aside for these upfront expenses, you'll either have to rethink in buying a house for the time being or lower your home price range.