Now you know where to start the home-buying process, let’s dive into a topic I’m sure you all have been wondering about…money! “How much money should I save?”, is the top question I get from my Instagram followers. (Allow me to pub for a second – please take a moment to follow me on Instagram/Twitter/Facebook @BDoesRE ☺). There are many of you saving to purchase a house but are you saving enough?

Did you know you should save for more than just the down payment? Most of you may be thinking “Wait. What?!” Yes! The down-payment is the tip of the iceberg. You must prepare your pockets for other expenses. Let’s talk about the most important ones:

• Down Payment: It’s common to put down 20% of the loan amount, to avoid higher costs and private mortgage insurance (PMI); however, many lenders are allowing much less. There are first time home buyer programs accepting as little as 3% down. 
• Contract Costs: When submitting an offer there are a few expenses buyers may incur: Here are a few:
  • Option Period. A negotiated time-period to get the property inspected from the basement to the roof! Usually, the option period is $100-$200.
  • Home Inspection. The home inspection during an option period. You may spend $200-500 on a general home inspection.
  • Earnest money. Consider this a second deposit. It shows the seller you have good faith in the transaction. Earnest money is typically 1% of the sales price.
• Closing Costs: Expenses for closing your mortgage. Typically, the costs are 2-5% of the loan amount. With a great negotiator, aka a great realtor, bka Brittany McCoy, this cost may be deferred to the Seller.
• After Closing Expenses: Here’s another fun fact, properties may not include a refrigerator. After Closing Expenses, may include appliances, painting, new furniture and any other touches you want to turn your house into a home.

So how much is enough? Survey says, “enough” is dependent on your approved loan amount. Today’s blog piggyback’s off part one of this series, which is to research and choose a lender. Once your lender tells you how much you can afford, you’ll know if you’re savings support that dream home.

Contact me directly with any questions about how much money to save or any real estate related questions! Come back for tip #3.