Buying a home is a goal for most people. It requires sizeable pockets that will help you fund the various expenses and processes that come with the purchase of a home. Having the right information about the cost of buying a home is a great guide to knowing how to plan your finances for the future event.
Before buying a home, you need to determine a few factors such as the preferred location, type of home, amount of space needed, and the transport systems available. Most people buy modern homes Seattle through mortgages. These factors will help you and your realtor know when and where to look for your ideal home, which will in turn give you an estimate of the amount of money you need to save and borrow in order to turn this into a reality. When your plan comes of age, you need to be pre-approved for a mortgage to know the possible loan amount you may receive.
The down payment
The type of mortgage you get determines the amount of money you need for the down payment. The down payment typically ranges between 3.5% and 20% of the total price of the home. Putting up a large down payment is definitely the preferred option since it gives you a large stake in the house immediately and it offloads the burden of monthly payments to be made for the mortgage.
A high down payment of 20% or more also helps the buyer avoid mortgage insurance. If you are not able to put up such a large sum of money for the down payment, consider getting a FHA loan or looking into VA loan if you are a veteran and USDA loan if you are getting a house in a designated rural area such as Snohomish county horse property for sale.
Just when you think you have closed a deal, you are presented with an array of closing costs. Closing costs consist of lender charges and third-party charges and these may add up to 5% of the price of the home.
Lender charges include application, processing, underwriting, credit report, document preparation, courier, origination points, discount points, and rate lock. You should find out the lender charges within three days of your loan application.
Third party charges include appraisal, title search, title insurance, survey, inspections (home and pest), flood zone determination, and transfer taxes.
You may negotiate with the seller to pay the closing costs on your behalf and add the amount to the price of the home if the home is in an area that allows. Alternatively, you may negotiate with the lender to pay your closing costs in exchange for you paying a higher interest rate on the mortgage.
When you find your ideal home and make an offer to seller, you are required to put up about 1-3% of the price of the home with an escrow firm or an attorney if the home requires earnest money. Earnest money is a reserve that is held until the deal closes or fails to close. If the deal closes successfully, the earnest money is added to your down payment.