Buying a Home: How Much Money Do I Need?

When buying a home, we can all get cought up in the excitement of searching for that elusive property we will soon be calling home. Open houses, scheduled showings and even new home tours which present us with so many options, opportunities and dreams of what homeownership will be like without having a full understanding of the home buying process. Needless to say, once the dreams have subsided, reality sets in with a slew of questions to fully grasp the task ahead.

How Much Money Do I Need?

You may have heard from a friend, family member, or even a real estate agent that you can purchase a property for No Money Down! Yes, $0! What you don’t hear is the small print and conditions in order to get these types of loans. The only 0% Down loans now a days are only provided be the Department of Vetarns Affairs or VA. Otherwise you are looking at an FHA insured or Conventional Loan which will require a down payment of 3.5% and up.
Another distiction to make is what the down payment will be and how much are your closing costs. These are 2 different things which should be accounted for before even looking for homes.

The down payment needs no explanation. Closing costs on the other hand is a term used to describe any and all additional costs associated with buying a home. (ie. Escrow Fee, Title Fee, Loan Origination Fee, Admin Fee, Courier Fee, Notary Fee, etc…)
There are many fees in the home buying process and these can range between 2% and 4% in addition to the down payment.

Many Loan Officers and real etsate agents are quick to tell you “We’ll have the Seller pay for those” which is easier said, then done. Everything in real estate is negotiable so yes, we can request in our offer that the seller contribute x amount towards your closing costs however, this will look unfavorably to a seller should they have other offers in hand. The seller is only concerned with how much he or she will end up with at the end of the day. It may be wise to request the seller to pay for them but expect to have to foot the bill yourself, should they reject your offer and you’ve have fallen in love with the property.