Good Morning!
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 for first time home buyers).
…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% to 2% 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.
Closing costs and prepaid taxes, insurance, and interest can be paid by… Buyer, Seller, Loan Officer, Agent. Or any combination of these.
Have a good day today! …and thanks for reading.