Costs to Buying a Home
In buying a home for the first time there can be several different financial costs to the buyer. It’s best to understand the costs in the beginning so you can appropriately prepare. Nothing in this process should be unexpected. Working with an experienced Realtor who will guide and prepare you is key.
The first most obvious cost is the down payment for the loan. Traditionally FHA loans will require 3.5% of the sales price down. Conventional type loans may require 5% to 10% of the sales price down. In some rural areas you may be able to get 100% financing and no money will be required to be put down. This is also the case with VA loan programs. It’s best to speak with a mortgage lender to find out exactly what type of loan you qualify for and how much money will be required down. A lender will be able to analyze your specific situation and suggest the best loan program for you.
A mortgage lender will be able to calculate how much closing costs will be in purchasing a new home. A good rule of thumb is to estimate another 3% for closing costs. As a first time home buyer, you may want to ask the seller to pay your closing costs for you if your funds are tight. This is definitely an option in purchasing a home. Just keep in mind, that if you need the seller to pay your closing costs you do lose your negotiating power. You will typically pay full price (or over full price) when the seller is paying the buyer’s closing costs.
I also suggest to first time homebuyers to budget $350 for the home inspection and termite inspection. The home inspection is performed within 10 days of agreeing to terms in purchasing a home (under contract). At the time of the inspection, the home inspector needs to be paid. Be sure to budget this $350 because it is a must have.
In Springfield MO, the refrigerator in the kitchen is considered personal property. The seller will therefore take the refrigerator with them. Buyers need to budget for the cost of purchasing a new refrigerator. It may be a great time to ask mom and dad to buy a house warming gift!
Anytime you purchase a home (new or old) you will be given the option of purchasing a home warranty. I’m a big believer in purchasing a home warranty. I have several of my own personal stories that I’ve shared on our blog. The home warranty can be a real money saver when something unexpectedly goes wrong during your first year of home ownership. In most cases, buyers spend all their savings putting money towards the down payment of purchasing leaving little left over for their emergency savings account. In most cases the home warranty will cost approximately $420. As a buyer you can ask the seller to purchase a home warranty for you. Foreclosure properties (owned by banks) will not purchase a home warranty. Some sellers simply do not agree to purchase a warranty for the buyer. For this reason, I always suggest buyers are prepared to purchase the warranty themselves. This $420 can be paid at time of closing.
Don’t forget the few incidentals you will need for a new home. There are a few items you may need right away such as a lawn mower, washer and dryer, blinds/drapes for the windows.
If you have any further questions or would like more details, please call one of the Team Thomas experienced Realtors to guide you.