Before You Start Looking – Make Sure You Have Enough Money To Close…

 

I’ve covered this before, but I think it’s worth repeating…

Before you go out house hunting make sure you have enough money available to get your house closed. 

…I know it sounds simple, but many people don’t realize the amount of funds they will need available to get into a house.

Here is a simple breakdown of your out of the out of pocket costs you could expect by loan program.

1) VA: 100% loan. No down payment.

2) USDA: 100% loan. No down payment

3) FHA: Minimum 3.5% down payment.

4) Conventional: 5% minimum down payment. (There is also a 97% conventional if you have good credit).

…but you can expect more out of pocket than just the down payment. There are two other costs you can expect to pay when you purchase a home…

1) One, is prepaids. This is pre paid interest, taxes, and insurance. Typically your prepaids will run 1% to 2.5% of a sales price.

2) Then there’s your closing costs… Typically closing costs (from all entities – title, appraisal, mortgage, survey, etc.) will add another 1.5% to 3% to a sales price. 

Be prepared for these additional costs. However, there are a couple of ways to help you lower the closing costs and prepaid expenses.

The best way is to ask the seller to help you. 

If the seller refuses to help you pay your closing costs and pre paids – there are other ways to get this done. Contact me and we can discuss some options for you.